Futures Little Changed, Narrow Range, Awaits FOMC Minutes

JGB futures are unchanged versus settlement levels in afternoon Tokyo trade.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined news from the Yomiuri newspaper that the government plans to issue bridge bonds for about 2 years to finance childcare policies.
• In the absence of other domestic catalysts, market participants have likely been on headlines and US tsys watch ahead of the release of FOMC Minutes later today. US tsys have witnessed a bull steepening in Asia-Pac trade, with the 2-year yield decreasing by 7bp while the 10-year yield by 1bp.
• Cash JGBs are little changed with yield changes ranging from +0.8bp (1-year) to -0.4bp (5-year). The benchmark 10-year yield is 0.1bp higher at 0.405%, below the BoJ's YCC limit of 0.50%.
• The 40-year zone sees its yield 0.1bp higher ahead of the scheduled supply on tomorrow.
• Swap curve bull flattens out to the 10-year zone with rates 0.1 to 0.6bp lower. Rates for the 20-year zone and beyond are flat to 0.4bp lower. Swap spreads tighter across the curve.
• Later today sees the release of Machine Tool Orders (April final) ahead of Weekly Security Investment Flow data and 40-year JGB supply tomorrow.