Futures Unchanged, Sitting Mid-Range Ahead Of 5-Year Supply

At the Tokyo lunch break, JGB futures are sitting close to flat, +1 compared to settlement levels, in the middle of the Tokyo morning range.

• Apart from the earlier discussed weekly investment flow data indicating Japanese outflows to global bonds and offshore selling of Japanese bonds, another noteworthy development has been a speech by BoJ Board Member Asahi Noguchi. In his speech, he emphasised that the central bank's top priority is to bolster the emerging momentum for wage growth, which can be achieved through monetary easing. Noguchi believes that accomplishing this goal will ultimately lead to a virtuous economic cycle in Japan. (See link)
• With the local calendar thin today, local participants have likely been on headlines and US tsys watch ahead of 5-year supply.
• Cash US tsys are slightly cheaper in Asia-Pac trade.
• Cash JGBs are little changed at the Tokyo lunch break with a slight twist flattening of the curve. The benchmark 10-year yield is 0.2bp lower at 0.380%, below the BoJ's YCC limit of 0.50%.
• The 5-year benchmark is 0.2bp lower at 0.073%, showing no concession on the curve, ahead of today’s supply.
• Swap spreads are wider beyond the 2-year zone.