Mostly Firmer, 10-Year Supply Eyed

JGB futures edged back from their Tokyo peak during the morning session, hitting the lunch bell 8 ticks above yesterday’s settlement levels. The bulk of the cash curve sits flat to 1.0bp richer on the day, with 2s and 7s outperforming. 10s are little changed ahead of this afternoon’s 10-Year JGB supply, which likely limited participation in the aforementioned rally. Further out, 40s have cheapened by ~0.5bp, as participants once again look to the potential for increased issuance in that sector to finance the well-documented fiscal support package. The JGB VIX measure continues to edge away from the multi-month high lodged at the backend of November.