Futures Reverse Early Weakest To Be Near Session Highs Ahead Of 40Y Supply

In Tokyo morning trade, JGB futures are richer and near session highs, +22 compared to settlement levels, after initially paring overnight gains in early Tokyo dealings.

• According to MNI’s technicals team, JGB futures are bullish, having risen to a new multi-month high last Tuesday. That high marked the highest since August on the continuation contract. This notably extends the recovery from the early November pullback low and keeps the S/T outlook tilted higher. 147.21 marks the next key upside level, the Aug 9 high. 143.44, the Oct 31 low, marks key support.
• The local calendar is empty today, apart from 40-year supply.
• Cash US tsys are flat to 1bp cheaper so far in today's Asia-Pac session after yesterday’s solid gains. A slight flattening bias is apparent.
• The cash JGB curve is mixed with yields 0.9bp (1-year) higher to 2.2bps lower (5-year). The benchmark 10-year yield is 2.4bp lower at 0.754% versus the cycle high of 0.97% set in late October and the BOJ's 1% YCC reference rate. The 40-year yield is 1.1bps lower at 1.928%, slightly underperforming on the curve ahead of supply.
• The swaps curve has bull-flattened, with swap spreads mixed.