Futures Stick To Narrow Range, Curve Comes Under Light Flattening Pressure

JGB futures were confined to the range established during the overnight session during the Tokyo session, after blipping higher at the re-open, dealing at unchanged levels ahead of the bell. Cash JGBs run little changed to 2bp richer on the day, with the curve flattening as 20s lead the bid.

• Firmer than expected domestic data and modest upside surprises in the Chinese official PMI prints likely capped, and then pressured, the space during the Tokyo morning (all at the margins given the narrow ranges).
• The presence of BoJ Rinban operations then provided some offset, with no fresh impetus evident on the back of the movement in the cover ratios observed across the 3- to 25+-Year buckets.
• BoJ board member Nakagawa reaffirmed the Bank’s central stance in her latest address i.e. stressing the need for sustained monetary easing as the Bank looks to facilitate meaningful wage growth to underpin inflation.
• News that Japan will be more than doubling the amount of permitted international travellers from 7 Sep met wider expectations on the back of press reports and had little, if any, impact on JGBs.
• Domestically, Q2 CapEx and the final manufacturing PMI reading are due tomorrow, as is 10-Year JGB supply. The latest round of weekly international security flow data will also receive the usual scrutiny.