Futures Pare Losses At the Tokyo Lunch Break, 30Y Auction Results Due

At the Tokyo lunch break, JGB futures have pared morning weakness and are sitting at session highs, -3 compared to settlement levels.

• In addition to the previously outlined international investment flows, local participants have had to digest comments from BoJ Board Member Nakagawa. Bloomberg reported that Nakagawa followed a similar line to recent BoJ speakers stating that the bank needed to maintain monetary easing while paying careful attention to market functioning. "I believe the sustainability of monetary easing has increased because the decision has made it possible for the bank to flexibly respond to both upside and downside risks in the future," she said.
• Cash JGBs are mixed, with yields 0.1bp higher to 0.9bp lower. The benchmark 10-year yield is 0.2bp lower at 0.658%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The 30-year JGB yield is 0.8bp lower at 1.646%, outperforming on the curve ahead of today’s supply.
• Swap rates are 0.1bp to 0.5bp lower across the curve, apart from the 4-year (0.1bp higher). Swap spreads are generally wider beyond the 3-year.