Futures Stronger, Sitting Mid-Range, US JOLTS Data Later Today

In the afternoon session, JGB futures are holding in positive and in the middle of the session’s range, +15 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined somewhat mixed December jobs data.
• Cash JGBs have ground out a slight bull-flattening of the curve in the afternoon session, with yields flat to 1.4bps lower. The benchmark 10-year yield is 0.8bp lower at 0.715% versus the Nov-Dec rally low of 0.555%.
• The 2-year is unchanged after today’s supply. The 2-year auction demonstrated mixed demand metrics, as the low price failed to meet dealer expectations but the cover ratio increased to 3.742x from 3.340x in December. It was the highest cover ratio for a 2-year auction since July last year. The auction tail was also shortened.
• Unlike recent JGB auctions, today’s result appears to indicate that the current outright yield adequately accounts for uncertainties surrounding the BoJ policy outcome.
• Swap rates are flat to slightly lower, with swap spreads mixed.
• Tomorrow, the local calendar sees Retail Sales and Industrial Production data for December, along with the BoJ Summary of Opinions (Jan. MPM).
• Attention turns to US JOLTS job openings data later today.