JGBS: Cash Bonds Little Changed Despite Weak 10Y Auction

JGB futures are holding an uptick, +2 compared to settlement levels, on a data-light session.

• The 10-year JGB auction delivered disappointing results, with the low price falling short of expectations at 98.34. Additionally, the cover ratio dipped and the tail lengthened.
• This came despite the auction offering an outright yield 10bps higher than last month, just below the July cyclical high. However, the 2s/10s yield curve had flattened to near its lowest point since mid-2023.
• Weaker sentiment toward global long-end bonds—though somewhat improved from two weeks ago—and expectations of further near-term tightening by the BOJ appear to have weighed on demand.
• Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session. Focus now turns to Wednesday's ADP private employment and ISM data ahead of Friday's non-farm payroll release.
• Cash JGBs are slightly mixed across benchmarks. The benchmark 10-year yield is 0.3bp higher at 1.083% after today’s supply.
• The swaps curve has bear-steepened, with rates flat to 2bps higher. 
• Tomorrow, the local calendar will see Jibun Bank PMI Composite & Services alongside BOJ Rinban Operations covering 1-5-year and 10-25-year OTR JGBs.
• The next major release will be on Friday's wages data. Next week delivers Q3 GDP revisions then the Tankan survey is out on 13 December.