Futures Slightly Pare Overnight Losses, 10Y Yield Hits A New Cycle High

In Tokyo morning trade, JGB futures have pared overnight losses, -6 compared to settlement levels.

• Japan’s monetary base rose 5.6% in September from a year ago.
• With the local calendar light today, local participants have likely eyed the re-opening of US tsys in Asia-Pac dealings. Cash US tsys are 1-2bps cheaper across benchmarks so far in the Asia-Pac session after Federal Reserve Bank of Cleveland President Loretta Mester said a final interest rate hike will likely be needed to boost the fed funds rate to its cycle peak, where it will sit for some time to stabilise prices. (See MNI: One More Fed Hike Likely, Then Hold For Some Time -Mester here)
• Cash JGBs are cheaper across the curve. The benchmark 10-year yield is 0.3bp higher at 0.78%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also just shy of the cycle high of 0.785%, set earlier today. The MoF plans to sell Y2.7tn of 10-year JGBs.
• The swap curve has twist flattened, pivoting at the 5s, with rates 0.4bp higher to 0.3bp lower. Swap spreads are generally tighter.