Futures Remain In Negative Territory, Pressured By Rinban Operations

JGB futures are sitting in negative territory, -5 compared to the settlement levels, after hitting a new session low (145.39) in early Tokyo afternoon dealing.

• The pressure on JGBs during the initial stages of the Tokyo afternoon session aligned with the insights gleaned from this morning's BoJ Rinban operations. These operations saw positive spreads, with the exception of the 1-3-year maturity range and witnessed increased offer cover ratios across all maturity buckets.
• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined trade balance data.
• The cash JGB curve has twist-flattened, pivoting at the 5s, with yields 0.5bp lower to 1.8bp higher. The benchmark 10-year yield is 1.1bp higher at 0.729%, a new post-YCC tweak high.
• Swaps are also dealing mixed, with rates 0.2bp lower to 1.3bps higher. Swap spreads are generally tighter across the curve.
• The swap curve has also twist-flattened, with swap spreads tighter across the curve.
• Tomorrow the local calendar is empty ahead of National CPI for August and the BoJ policy decision on Friday. The MoF will also conduct a liquidity enhancement liquidity auction for OTR 5-15.5-year JGBs tomorrow.