Futures Weaker, At Cheaps, Rinban Operations Pressure 10-25-Years Zone

JGB futures are at Tokyo session lows in afternoon trade at 148.44, -12 compared to settlement levels as US tsy futures sit slightly weaker in Asia-Pac trade. Cash tsys are closed today for the Memorial Day holiday.

• Cash JGBs cheapen in afternoon trade, primarily driven by the 10-25-year maturity zone. This movement followed BoJ Rinban operations which revealed a higher offer cover ratio and an increased positive spread. However, the cover ratios for the 3-5-year, 5-10-year, and 25-year+ buckets showed a slight decrease.
• Cash JGBs exhibit a mixed trading pattern, displaying yield fluctuations ranging from 0.5bp lower for the 5-year maturity to 1.3bp higher for the 20-year zone. The benchmark 10-year yield has increased by 1.1bp, reaching 0.432%. Meanwhile, the benchmark 2-year yield, ahead of tomorrow's 2-year supply, is trading unchanged lower at -0.063%, showing no sign of concession on the curve.
• The swap curve has twist steepened in afternoon Tokyo trade with rates -0.5bp to +1.8bp and a pivot point at the 4-year zone. Swap spreads are wider beyond the 3-year.
• The local calendar tomorrow sees the Jobless Rate for April released tomorrow ahead of Retail Sales (Apr), IP (Apr P) and Housing Starts (Apr) on Wednesday.
• The MoF plans to sell Y2.9tn of 2-year JGBs tomorrow.