Futures Recover Some Of Late Tokyo Losses Overnight

JGB futures nudged higher in overnight trade, reversing some of the late Tokyo pull lower in the contract, while leaning on a light bid in U.S. Tsys for some support.

• Note that the BoJ stepped in via a fixed rate operation in the 5- to 10-Year zone late in Tuesday’s Tokyo session as it looked to protect the upper boundary of its YCC parameters, with 10-Year JGB yields printing just below the upper boundary of the BoJ’s permitted -/+0.50% corridor.
• Be on the lookout for unscheduled Rinban purchases covering the 5- to 10-Year zone of the curve if a more meaningful test of the BoJ’s policy settings plays out in the coming days.
• Local headline flow has seen Asahi report that the Japanese government is planning to sell Y20tn in transition bonds over the next decade, with the potential for that issuance to get underway from the coming Autumn.
• Final manufacturing PMI data headlines a limited local docket on Wednesday.