Richer After 30Y Supply, BoJ Rinban Operations Tomorrow

JGB futures are holding an uptick, +4 compared to settlement levels, after dealing in a relatively tight range in the Tokyo session.

• With the domestic calendar light today, Leading and Coincident Indices for December (Preliminary) are due later, the local market’s focus was likely on today’s 30-year supply.
• The auction showed solid demand metrics, with the low price meeting dealer expectations, the cover ratio increasing to 3.181x and the tail shortening.
• Today's auction result fell in line with last week’s 10-year supply, which bucked recent trends and showed solid demand metrics.
• As highlighted in the MNI Preview, today’s auction took place with an outright yield that was 15bps higher than the early January offering. Moreover, the 2/30 yield curve was 15bps steeper and the 10/30 curve was 5bps steeper than the levels observed in early January.
• US tsys are 1-2bps richer in today’s Asia-Pac session after finishing richer on Tuesday.
• Cash JGBs are dealing richer across the curve, with the 20-40-year zone leading (1.4-1.8bps richer). The benchmark 10-year yield is 1.3% lower at 0.710% versus the Nov-Dec rally low of 0.555%.
• The swaps curve has bull-flattened, with rates flat to 1.9bps lower. Swap spreads are generally wider.
• Tomorrow, the local calendar sees weekly International Investment Flows, BoP Current Account Balance, Bank Lending and Tokyo Avg Office Vacancies data, along with BoJ Rinban Operations covering 1-25-year JGBs.