Richer, At Session Highs, US Tsy Yields Higher With Oil

In Tokyo morning trade, JGB futures are richer and at session highs, +25 compared to settlement levels.

• This comes after the morning’s local data drop, which showed a November current account balance of Y1925.6bn versus expectations of Y2385.1bn and bank lending up 3.1% y/y (3.4% ex-trusts).
• Meanwhile, in the week ending January 5, offshore investors offloaded -¥402.7bn of local bonds, nearly offsetting the inflows seen in the final week of 2023. Japan's buying of offshore bonds picked up in the first week of this year. Again, the trend around offshore bond purchases was mostly positive through Dec.
• Japan sold $106.9 billion worth of bonds this year as of Jan. 11, according to Bloomberg calculations using official data. Issuance was down 13% compared to the same period last year. (See link)
• Benchmark US tsy yields are trading 1-2bps higher in today's Asia-Pac session. This movement could potentially be a reaction to the impact of oil prices following US missile strikes in response to Houthi attacks.
• Cash JGBs are richer, with the futures-linked 7-year as the best performer (-1.9bps). The benchmark 10-year yield has declined by 1.7bps, settling at 0.585%.
• Swaps curve has bull-flattened, with rates 0.5bp to 1.9bps lower. Swap spreads are mixed.