Futures Richer & At Tokyo Session Highs, Twist Flattening Of JGB Curve

JGB futures are richer and near the Tokyo session high of 145.27, +50 compared to settlement levels, after yesterday’s holiday. The push to a fresh session high in the Tokyo afternoon session is consistent with the results of this morning's BoJ Rinban operations, which saw negative spreads and generally lower offer cover ratios across the various JGB buckets.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined August current account and trade balance data. Later today sees the release of the September Eco Watchers Survey.
• Accordingly, local participants are also likely to have eyed the re-opening of cash US Tsys after yesterday’s holiday. Cash US Tsys sit 12-17bps richer across the major benchmarks, with the curve flatter.
• The cash JGB curve has twist-flattened. The benchmark 10-year yield is 3.8bps lower at 0.767% versus the cycle high of 0.814%, set late last week.
• The swaps curve has bull-flattened, with rates 0.9bp to 5.6bps lower. Swap spreads are tighter across all maturities.
• Tomorrow, the local calendar is relatively light, with Machine Tool Orders as the only release. That said, the MOF plans to sell Y2.5tn of 5-year JGBs.