Futures Move Into Negative Territory At Lunch, Rinban Results Are Due

At the Tokyo lunch break, JGB futures have slipped into negative territory, -12 compared to settlement levels, after the early pop following the weekend’s Middle East developments proved to be fleeting.

• Nevertheless, spillover from higher oil prices will remain the focus today, along with broader risk trends, after the attack on a Russian Oil tanker in the Red Sea late Friday and the weekend attack on US soldiers in Jordan near the border with Syria.
• Cash US tsys are dealing flat to 1bp richer in today’s Asia-Pac session.
• Today, the local calendar has been empty, apart from BoJ Rinban Operations covering 3-10-year and 25-year+ JGBs. Results are due soon.
• Cash JGBs have cheapened over the morning session, with yield movements flat to 2.6bps higher (20-year). The benchmark 10-year yield is 0.9bp higher at 0.726% versus the Nov-Dec rally low of 0.555%. The 2-year is outperforming (flat) ahead of tomorrow’s supply.
• Swaps curve is witnessing a bear-steepening, with rates flat to 3bps higher. Swap spreads are mostly wider.