Futures Unchanged, Tight Range, Awaits BoJ Rinban Operations

JGB futures are holding the downtick, -1 compared to settlement levels, after trading in a tight range as investors await BoJ Rinban operations covering 1- to 25-Year JGBs.

• Without domestic drivers, local participants are digesting yesterday's US data and the lack of a breakthrough in the US debt ceiling talks. US tsys are little changed in Asia-Pac trade.
• The government plans to issue bridge bonds for about 2 years to finance childcare policies, according to the Yomiuri newspaper.
• The 10-year break-even inflation rate reached its highest point since September, buoyed by a robust auction outcome for inflation-linked bonds yesterday.
• Cash JGBs are little changed in early Tokyo trade with yield changes ranging from +0.8bp (1-year) to -0.9bp (5-year). The benchmark 10-year yield is 0.3bp lower at 0.401%, below the BoJ's YCC limit of 0.50%. The 40-year zone sees its yield 0.7bp lower ahead of the scheduled supply on Thursday.
• Swap curve bull flattens with rates 0.1 to 0.8bp lower and swap spreads tighter.