Futures Soften Overnight, BoJ Rinban Due

JGB futures shed 9 ticks in overnight dealing after reversing an uptick that was observed in early European hours, after the contract initially built on the gains witnessed during Tuesday’s Tokyo session. The contract ultimately went out a little above worst levels of post-Tokyo trade.

• It will be interesting to see if this week’s curve steepening theme will continue in JGBs, in lieu of the twist steepening observed on the U.S. Tsy curve overnight.
• Fiscal matters have dominated the local press since Tuesday’s close, with Kyodo sources suggesting that budget requests for FY23 are set to reach at least ~Y110tn (the deadline for ministerial budget request submissions is at the end of this month, with the initial budget set to be compiled in December).
• Elsewhere, JiJi reported that Japanese companies providing personal financial training for their employees may receive tax breaks, while Mainichi pointed to Japanese policymakers mulling a potential reduction of COVID-related employment subsidies.
• BoJ Rinban operations covering 1- to 10-Year JGBs and the final round of machine tool orders data for July headlines the domestic docket on Wednesday.