Futures Trading On A Low Note At Lunch

JGB futures closed the Tokyo morning session on a low note, -20 compared to settlement levels. Local participants have extended the weakness seen since yesterday’s 20-year supply. Yesterday’s sale of 20-year JGBs drew a lower-than-expected cut-off price, a wider tail and a lower cover ratio.

• In the absence of domestic drivers, the domestic market appears to have been content to also get its cues from US tsys. Cash tsys are dealing little changed across the major benchmarks in Asia-Pac trade after giving back early strength.
• The cash JGBs curve bear steepens beyond the 1-year zone led by the 7-10-year zone. The benchmark 10-year yield is 1.5bp higher at 0.389%, below the BoJ's YCC limit of 0.50%.
• The benchmark 20-year is 0.9bp cheaper at 0.967. The yield on 20-year debt advanced 1.5bp to 0.958% yesterday.
• Swap rates are higher across the curve with the 3-7-year zone leading (+1.0bp). Swap spreads are wider apart from the 7-10-year zone.
• Later today BOJ's Ueda is on a panel at the ECB Forum with Fed Chair Powell, ECB's Lagarde, and BOE's Bailey.