Futures Struggle Overnight, 5-Year JGB Supply Due

In terms of domestic news flow, Japanese PM Kishida and BoJ Governor Kuroda reiterated their united stance re: FX matters late on Monday. It also became apparent that Kuroda expressed his concern re: recent FX market movements, which fed into some weakness for JGB futures and modest, short-lived JPY strength.

• Pressure in European government bonds and UK Ggilts also helped JGB futures move lower in post-Tokyo dealing, with the contract shedding 35 ticks vs. Tokyo settlement levels overnight, building on the pullback from the pre-weekend levels, but finishing off lows
• We would suggest that some worry ahead of today’s 5-Year JGB auction and continued impaired market functioning also fed into the weakness.
• Also note that Japan's government left its main economic assessment unchanged from the previous month for the third consecutive month but lowered its assessment on production for the first time since November ‘21, the Cabinet Office said on Monday.
• The aforementioned round of 5-Year JGB supply headlines the domestic docket on Tuesday.