JGBS: Futures Cheaper, Narrow Range, Light Calendar, Rinban Suggests Pressure

At the Tokyo lunch break, JGB futures are weaker, -20 compared to settlement levels,

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined monetary base data and the BoJ Minutes from the MPM. Given last week’s YCC tweak by the BoJ, the minutes are likely to have a less-than-normal impact on the markets.
• The cash JGB curve has twist steepened, pivoting at the 5-year, at the Tokyo lunch break with yield changes ranging from -0.8bp to +0.9bp. The benchmark 10-year yield is +0.2bp at 0.609%, above the BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• This morning’s BoJ Rinban operations saw higher and positive spreads and generally higher cover ratios (1-3-year: 2.55x, 3-5-year: 1.63x, 5-10-year: 2.16x, 10-25-year: 1.82x and 25-year+: 2.70x), which may generate some slight pressure in early rounds of the Tokyo afternoon session.
• In contrast, the swap curve has twist flattened, pivoting at the 7-year, with rates +0.5bp to -0.6bp. Swap spreads are wider out to the 4-year and tighter beyond.