Futures Near Session Highs, Tracking US Tsys In Asia-Pac

In Tokyo afternoon dealings, JGB futures are stronger and near session highs, +13 compared to the settlement levels, having more than reversed overnight weakness induced by US tsys.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined National CPI, which printed in line with expectations at the headline level but slightly above expectations for core and core-core measures.
• Accordingly, the direction in JGBs has likely been assisted by the partial reversal of yesterday’s US tsy weakness in today’s Asia-Pacific session. Cash US tsys are 1-5bps richer, with the curve flatter. Reuters reported that drones had hit US bases in Iraq.
• Cash JGBs are mixed, with the belly of the curve performing the best. Yield movements are ranging from -1.2bps to +1.7bps. The 5-year is outperforming on the curve at 0.362% after BOJ said it would offer 5-year loans to banks on Tuesday (See link ICYMI). The benchmark 10-year yield is 0.2bp lower at 0.838% versus the cycle high of 0.851% set yesterday.
• The swaps curve is richer, with the belly outperforming. Swap spreads are tighter.
• Next week, the local data calendar is empty on Monday ahead of Jibun Bank PMIs and Department Sales on Tuesday.
• Monday sees BOJ Rinban operations covering 1- to 25-year JGBs.