Overnight Gains in Futures Pared In Morning Trade

In Tokyo morning trade, JGB futures are holding in positive territory, +7 compared to settlement levels, but have pared overnight gains.

• Preliminary Jibun Bank PMI data for October showed an unchanged manufacturing index at 48.5. However, the services and composite PMIs were lower at 51.1 & 49.9 respectively versus 53.8 and 52.1 prior. September Department store sales are due later today.
• Japan’s Aug. Cash Earnings +0.8% Y/y; Real Earnings -2.8% (See link) Japanese salaries in August rose a revised 0.8 per cent from a year earlier, according to data from the Ministry of Health, Labor and Welfare. Regular wages rose a revised 1.3 per cent.
• Cash JGBs are mixed, with yield changes bounded by +/-1.0bps. The benchmark 10-year yield is 0.6bp lower at 0.871%, above BOJ's YCC soft limit of 0.50% but below its hard limit of 1.0%. It is also lower than the cycle high of 0.882% set yesterday.
• Bloomberg reports that Treasuries came roaring back in Monday’s US trading session in what looks like an epic episode of short covering. Futures traders had been massively overbalanced toward bets on further declines in US government securities, based on the latest CFTC data. (See link)
• Swap rates are slightly lower across all maturities, with swap spreads mixed.