Futures Weaker & At Session Lows, Heavy Local Calendar Tomorrow

JGB futures are weaker and at Tokyo session lows, -14 compared to settlement levels.

• With the data calendar empty so far today, the local market’s focus has been comments from BoJ Board Member Naoki Tamura. He stated that the achievement of stable and sustainable 2% inflation is finally and clearly within sight (See link ICYMI)
• US tsys in Asia-Pac trade also likely weighed on JGBs. Cash tsys sit ~1bp cheaper across the major benchmarks. Asia-Pac participants faded yesterday's richening perhaps using the opportunity to close long positions/enter fresh shorts.
• Cash JGBs are cheaper across the curve, with yields 0.1bp (1-year) to 0.7bp higher (3-year). The benchmark 10-year yield is 0.1bp higher at 0.654%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• As suggested previously, BoJ Rinban operations, which saw higher and flat to positive spreads and higher cover ratios for the 5-10-year and 25-year+ buckets did generate slight pressure, particularly for the 5-10 bucket and longer-dated JGBs, in the early rounds of the Tokyo afternoon session.
• The swaps curve has bear steepened, with rates 0.1-1.6bp higher. Swap spreads are wider beyond the 3-year.
• Tomorrow the local calendar is heavy, with Retail Sales (Jul), Industrial Production (Jul P), International Investment Flows (Aug 25) and Housing Starts (Jul). We also hear from BoJ Board Member Nakamura.