Futures Unwind Overnight Bid

JGB futures gradually gave back their overnight gains during the Tokyo morning, and last trade +1 on the day. The major cash JGB benchmarks trade little changed to ~1.0bp richer, with some light underperformance for the front end of the curve, while the belly was perhaps limited by the previously noted move in futures.

• There were steady and lower bid/cover ratios in the 1- to 3- and 10- to 25-Year BoJ Rinban buckets, even with the purchase sizes of the buckets being trimmed by Y25bn and Y50bn respectively from this round of Rinban operations going forwards (which was announced in the Jul-Sep Rinban plan). The 3- to 5-Year cover saw a very modest uptick, but the levels and degree of movement were relatively inconsequential.
• Local headline flow was dominated by speculation surrounding the spectator situation at the Olympics and a potential elongation of the state of emergency covering Tokyo.
• Monday's local docket is fairly empty, although participants will be more than aware of the proximity to Tuesday's 30-Year JGB auction.