Futures Soften Overnight, One Eye On The Holiday Exit

JGB futures shed 11 ticks in overnight dealing as oil market gyrations came to the fore after the China COVID-centric focus observed in Tokyo hours. This left the contract to trade to fresh session lows in post-Tokyo dealing, more than unwinding a modest uptick, but remaining with a familiar range.

• The flattening impulse observed in the likes of U.S. Tsys and UK Gilts may provide some support for the longer end of the JGB curve after yesterday’s weakness, but it is hard to tell, especially with futures lower after oil rebounded from Monday’s worst levels and with 40-Year JGB supply due on Friday.
• A liquidity enhancement auction covering off-the-run 1- to 5-Year JGBs headlines the domestic docket today.
• A reminder that Japan will observe a public holiday on Wednesday, which will result in the closure of Japanese markets.