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Futures Remain Off Highs, But Little Follow Through To The Downside, 40yr Supply Tomorrow

JGBS

JGB futures have largely been range bound in post lunch time trade. We were last 145.64, -.02. We sit close to the mid point recent ranges, lows for the session at 145.53, while end last week levels were at 145.73.

  • Spill over from US Tsy futures has been evident, which after breaking lower in earlier trade we sit a touch higher in recent dealings (last 108-10+).
  • The slightly stronger than expected services PPI from earlier didn't shift sentiment, while we await to see if Ueda's scheduled appearance before parliament delivers any fresh insights.
  • In the cash JGB space, we are higher in yield terms, although more so at the back end of the curve. The 10yr is above 0.78%, down from session highs (0.785%). The 20-40yr tenors are holding yield gains better (1.5-3bps higher). The 20yr was last above 1.51%.
  • It is a similar story in the swap space, with the 10yr back above 0.99%.
  • Note tomorrow we have 40yr supply on tap.

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