Futures Lead The Weakness

The Tokyo morning saw JGB futures push through their overnight session base as Tokyo reacted to the gyrations observed after Friday’s local close and spill over from this week’s early weakness in core global FI markets. The contract hit the lunch bell dealing -37 on the day, ~10 ticks off lows.

• Note there is little in the way of meaningful technical support seen in the contract until the July 11 low (148.80) which sits just over 100 ticks away.
• Cash JGBs run little changed to 3.5bp cheaper, with 7s providing the weakest point on the curve, driven by the softness in futures. Demand in the super-long end on the part of Japanese life insurers and pension funds seemed to have abated, at least for today, after signs of active capital deployment from that cohort at the tail end of last week.
• Local headline flow remains light.