Futures Register A Small Uptick At The Lunch Break

JGB futures sit at Tokyo session highs and just off overnight bests going into the lunch break, +6 compared to settlement levels. The move has been assisted by firmer US Tsys in Asia-Pac trade with yields 1-2bp lower.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined weekly foreign investment flow data which revealed sizeable net selling of international bonds.
• With the latest pullback in JGBs looking corrective, according to MNI’s technical analyst, attention remains on 149.53, the March 22 high. On the downside, the 50-dma provides support at 146.99.
• Cash JGBs are richer with yields 0.1-0.9bp lower across the curve. The benchmark 10-year yield is 0.6bp lower at 0.459%, below the BoJ's YCC limit of 0.50%.
• Low to average offer/cover ratios and spreads in today’s BoJ Rinban operations (covering 3 to 25-year+ JGBs) may provide some light support in early afternoon trade.
• The swaps curve has twist flattened out to the 20-year zone with the pivot being the 10-year zone. 30-40-year swap rates are unchanged. Swap spreads are wider across the curve.