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JGBS: Small Yield Swings For Cash Bonds Ahead Of 5Y Supply

JGBS

In the Tokyo morning session, JGB futures have dealt in a narrow range after unwinding overnight strength, +1 compared to settlement levels.

  • Outside of the previously outlined M2 & M3 Money Supply, there hasn't been much by way of domestic drivers to flag.
  • Cash US tsys are 1-2bps cheaper in today’s Asia-Pac session after yesterday’s somewhat mixed performance. The focus is on this week's CPI and PPI inflation measures to help gauge next week's FOMC policy announcement.
  • Cash JGBs are slightly mixed beyond the 1-year (+3.7bps) across benchmarks, with yield movements bounded by +/- 1.5bps. The benchmark 5-year yield is 0.2bp higher at 0.527% ahead of today’s supply.
  • The Japanese MoF will sell Y2.3tn of 5-Year JGBs. While last month’s supply showed poor demand metrics, today's auction comes on the heels of a solid 10-year outing in September.
  • The current outright yield is 5-10bps higher than August’s offering but 15bps lower than late July’s cyclical peak. Moreover, the 2/5 curve sits near the bottom of the range it has traded in since December 2022.
  • The swaps curve has bear-steepened, with rates 1-5bps higher. Swap spreads are wider.
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GlobalBulletAPACFixed Income BulletsJapanRegionMarkets

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