Futures Sit Cheaper At Lunch, Off Session Lows, Digesting Global Bond Sell-Off

At the Tokyo lunch break, JGB futures are currently standing at 148.70, -14 compared to the settlement levels, after reaching a low in overnight trading of 148.59.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Q1 GDP data which surprised on the upside.
• The vacancy rate for Tokyo office space rose 0.5ppt to 6.16% in May according to Miki Shoji Co., a privately held office brokerage company.
• Cash US tsys are sitting slightly richer in Asia-Pac after paring early gains. However, ranges do remain narrow thus far.
• Large purchases of French sovereign debt by Japanese funds in April might have been prompted by portfolio rebalancing from US debt, says Tsuyoshi Ueno, a senior economist at NLI Research Institute. Investors in the Asian nation also bought most Australian sovereign debt since 2021 while selling a net ¥2.01 trillion ($14.4 billion) of US sovereign bonds. (link)
• Cash JGBs ended Tokyo morning trade mixed with yield movements ranging between -1.1bp lower (5-year) to 0.5bp higher (7-year). The benchmark 10-year yield is 0.2bp higher at 0.429%, ahead of today’s 5-15.5 years until maturity liquidity enhancement auction.
• Swap rates are higher across the curve apart from the 10-year zone. Swap spreads are trading mixed at the Tokyo lunch break.