Futures Remain In Positive Territory At Lunch

At the Tokyo lunch break, JGB futures sit in positive territory, +9 compared to the settlement levels, after trading in a relatively narrow range.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Jibun Bank PMIs.
• Cash JGBs are cheaper, with yields flat (20-year) to 0.8bp higher (40-year). The benchmark 10-year yield is 0.7bbp higher at 0.673%, a post-YCC tweak high.
• This morning’s BoJ Rinban operations saw higher spreads and higher cover ratios for the 3-5-year and 10-25-year buckets (3-5-year: 2.51x and 10-25-year: 2.42x), which may generate some slight pressure in those parts of the curve in early rounds of the Tokyo afternoon session. The 1-3-year bucket saw a lower cover ratio (1.50x) and a lower and negative spread.
• Swap rates are also mixed, with movements bounded by +/-0.4bp. Swap spreads are generally tighter.