Futures Richer After A Strong Session For US Tsys, 40Y Supply Today

In post-Tokyo trade, JGB futures are sharply higher, closing +24 compared to settlement levels, after US tsys finished 7-8bps richer across the major benchmarks. A rally in EGBs spilt over adding support to US tsys, no net German debt issuance and ECB Chief Lagarde looking at PEPP reinvestments were the catalysts. Softer than expected New Home Sales and Dallas Fed Mfg added to the richening impulse in NY.

• The cash US tsys space was briefly pressured after the latest 2-year auction tailed, however, the downtick was short-lived and gains continued to extend after the 5-year auction showed improving, albeit below average, demand compared to the October auction.
• The latest MNI piece from our Tokyo policy team, late yesterday, noted economic outlook concerns weighing on the potential for an April exit next year from easy policy settings (see this link).
• BOJ Governor Ueda also reiterated (before parliament yesterday) that the central bank cannot sufficiently foresee the 2% inflation target yet.
• The local data calendar is empty today but later this week, capex and jobless figures will be in focus, particularly around shaping the BOJ outlook into early 2024.
• Today the MOF plans to sell Y700bn of 40-year JGBs.