Futures Pare Overnight Losses At Lunch, 30Y Supply Due

At the Tokyo lunch break, JGB futures pared overnight losses, -10 compared to the settlement levels. The move away session lows have likely been assisted by real and nominal labour cash earnings and household spending all printing lower than estimates.

• US tsys have also been supportive for the local market. The long end of the tsy curve has extended gains though the Asia-Pac session. Today's slated 3-year issuance is possibly weighing on the short end. Ranges do remain narrow with little follow through, little meaningful macro news flow has crossed. This leaves cash tsys flat to 5 bps richer, the curve has bull flattened.
• Cash JGBs are mixed across the curve with yields 1.1bp lower (40-year) to 0.4bp higher (7-year). The benchmark 10-year yield is 0.3bp higher at 0.633%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• 30-year JGBs are 0.6bp richer, showing no concession on the curve, ahead of today’s 30-year supply.
• The swaps curve twist steepens, pivoting at the 3-year, with rates 0.3bp lower to 0.5bp higher. Swap spreads are wider across the curve.