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Futures Weaker At Lunch

JGBS

At the Tokyo lunch break, JGB futures are weaker, -14 compared to the settlement levels.

  • The local calendar will see Machine Tool Orders data later today.
  • (Bloomberg) Bank of Japan officials see weakness in consumer spending complicating their decision over whether to raise interest rates at a policy meeting next week, according to people familiar with the matter. (See link)
  • Cash JGBs are 1-2bps cheaper across benchmarks. The benchmark 10-year yield is 1.6bps higher at 1.071% versus the cycle high of 1.108%.
  • The 40-year yield is 2.0bps higher at 2.443%, ahead of tomorrow’s supply and a week ahead of the upcoming BoJ’s policy decision. Although this 40-year sale is set for a higher outright yield than at the May auction (high yield of 2.27%), secondary pricing hasn’t yet reached the 2.5% area which is said to be a target zone for institutional investors.
  • Swaps are slightly mixed. Swap spreads are also mixed.

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