Futures Weaker Overnight, US Tsys Cheaper As US Corporate Issuance Weighs

In post-Tokyo trade, JGB futures are weaker, closing -12 compared to settlement levels, after US tsys finished ~8bps cheaper across the major benchmarks. US tsys were pressured through the NY session as rate locking/hedge unwinds tied to ~$37bn in corporate issuance weighed. Losses marginally extended after the latest round of US data. July Factory Orders were a touch better than forecast although still printed in negative territory.

• There was mixed Fedspeak. Gov Waller noted that last week's data allows the Fed to proceed carefully with no need to do anything imminently. Cleveland Fed President Mester was a touch hawkish, noting that the Fed may need to lift the rate higher on the back of stronger-than-expected data and upside inflation risks.
• Bloomberg reports the auction of 10-year bonds met weak demand on Tuesday, adding to the challenges of policymakers after investors baulked at the yields on offer in sales last month. “The auction confirms sluggish demand near 0.65% in yields,” said Ataru Okumura, senior Japan rates strategist at SMBC Nikko Securities Inc. “Yields are likely to rise in the medium term amid speculation of BoJ policy adjustments, keeping investors’ cautious stance.” (See link ICYMI)
• Today the local calendar is light, with a speech from BoJ Board Member Nakagawa (0230 BST / 1030 local time) as the highlight.