Futures Weaker, Near Toyo Session Lows, Heavy Local Calendar Tomorrow Incl. Tokyo CPI

JGB futures are sitting cheaper and near Tokyo session cheaps, -15 compared to session cheaps.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined international investment flows.
• The cash JGB curve has bear-steepened, with yields 0.1bp to 1.5bps higher. The benchmark 10-year yield is 1.1bps higher at 0.752%. It is slightly lower than the cycle high of 0.756%, set prior to the September BOJ decision.
• The 2-year yield is at 0.031%, 0.4bp higher on the day, but 0.4bp lower in post-auction dealings. This is despite only adequate demand exhibited in today’s auction.
• Considering that today's auction took place amidst more positive demand indicators for 5-, 20-, and 40-year JGB offerings, the results might be viewed as somewhat lacklustre, especially given that the outright yield was the highest since January. The notable steepening of the 2/5 JGB yield curve over the past month, reaching its most pronounced point since January, appears to have influenced demand compared to the recent 5-year auction.
• The swaps curve has bear-steepened, with rates 0.5bp to 2.1bps higher. Swap spreads are wider beyond the 1-year.
• Tomorrow the local calendar is heavy with the release of Tokyo CPI, Jobless Rate, Job-To-Applicant Ratio, Retail Sales, Housing Starts and Consumer Confidence data.