Futures Reverse Overnight Downtick In Early Tokyo Trade

JGB futures reverse the overnight downtick to be +1 versus settlements levels with US Tsys are 0.5-1.5bp richer in early Asia-Pac trade. At 148.06, JBM3 is sitting above the range of 147.40-147.92, which it has traded in since early April.

• Weekly foreign investment flow data from the MoF revealed Japanese investors' most sizeable round of net selling of international bonds since October. This shouldn’t surprise the market given the investment outlines tabled by the major Japanese life insurers and pension companies. Nonetheless, it appears to have assisted the bid for JGBs in early Tokyo trade.
• Cash JGBs are richer with yields 0.1-1.4bp lower across the curve. The benchmark 10-year yield is 0.4bp lower at 0.461%, below the BoJ's YCC limit of 0.50%.
• Swap spreads are wider across the curve. The swaps curve has twist flattened with the pivot being the 10-year zone.
• Ex-BoJ Deputy Governor Wakatabe, speaking on Bloomberg TV, states that he will be surprised if the BoJ changes YCC tomorrow. Forward guidance change is however a possibility.
• BoJ Rinban operations covering 3- 25-Year+ JGBs are slated for today.