Futures Positive, 10Y Weent Well, BoJ Rinban Operations Tomorrow

JGB futures are stronger, +6 compared to settlement levels, but off post-auction highs. JBM4 gapped higher to a Tokyo session high of 145.69 (+14) in early afternoon dealings after 10-year supply showed strong demand metrics. The low price beat wider expectations, the tail shortened, and the cover ratio rose to 3.799x from 3.239x at March’s auction.

• Crucially, this offering marked the inaugural auction for the new fiscal year and represented the first unveiling of the 10-year supply since the BoJ removed its negative interest rate policy (NIRP).
• Against this backdrop, today's outcome established an optimistic tone for a market that has experienced mounting pressure since mid-December, fueled by expectations of policy tightening from the BoJ.
• There hasn’t been much in the way of domestic data drivers to flag, outside of the previously outlined Monetary Base.
• Cash US tsys are dealing flat to 1bp richer in today’s Asia-Pac session, with a steepening bias.
• Cash JGBs are flat to 2bps cheaper across benchmarks. The benchmark 10-year yield is unchanged at 0.739% but slightly richer than pre-auction levels.
• The swaps curve has bear-steepened, with rates flat to 1.6bps higher. Swap spreads are mixed.
• Tomorrow, the local calendar sees Jibun Bank Composite & Services PMIs alongside BoJ Rinban Operations covering 1-5-year and 10-25-year JGBs.