Futures Richer After 30Y Auction, US Tsys Are Also Stronger

In Tokyo's afternoon trading, JGB futures have gained strength, +9 compared to settlement levels, following robust demand witnessed in today's 30-year auction. The auction's lower price surpassed dealer expectations, while the cover ratio reached its highest point seen in a 30-year auction since January 2022. Additionally, the auction tail was notably shorter, marking its briefest length since February 2022.

• There hasn't been a presence of domestic catalysts to highlight, apart from the previously outlined real and nominal labour cash earnings, as well as household spending, all printing lower than estimates.
• US tsys sit 1-5bps richer across the major benchmarks in Asia-Pac trade, the curve has bull flattened.
• The cash JGB curve has bull flattened in afternoon trade with yields 0.3-5.0bp lower. The benchmark 10-year yield is 1.3bp lower at 0.617%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The 30-year JGB is 4.2bp richer on the day after today’s 30-year supply.
• The swaps curve has also bull flattened after twist steepening at lunch. Swap spreads are generally wider across the curve.
• Tomorrow the local calendar sees July M2 & M3 Money Stock along with July Machine Tool Orders data.
• Tomorrow will also see BoJ Rinban operations covering 1- to 25-Year JGBs.