Futures Pare Morning Weakness At Lunch, Rinban Operations covering 1- to 25-year JGBs Due

At the Tokyo lunch break, JGB futures have pared morning weakness to be -2 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined trade balance data.
• JGB futures sold off sharply on Sep 11 and the contract has since traded through support at 145.49, the Aug 17 low. According to MNI’s technicals team, a continuation lower and a clear break of this area would confirm a resumption of the medium-term downtrend and pave the way for weakness towards 144.39, the lower band of a MA envelope study. On the upside, clearance of 146.41, the Sep 4 high would instead highlight a base and a possible short-term reversal.
• Cash JGBs are mixed, with yields ranging from 0.5bp lower (3-year) to 1.3bps higher (30-40-year zone). The benchmark 10-year yield is 0.5bp higher at 0.723%, just shy of the post-YCC tweak high of 0.726% set earlier today.
• Swaps are also dealing mixed, with rates 0.3bp lower to 0.5bp higher. Swap spreads are generally tighter across the curve.