Richer With 10Y Leading The Rally, 5Y Supply Tomorrow

JGB futures are richer and at session highs, +33 compared to the settlement levels.

• There hasn’t been much in the way of domestic data drivers to flag, outside of the previously outlined M2 & M3 Money Stock data. Machine Tool Orders data is due later.
• US tsy futures are slightly weaker in today’s Asia-Pac session, with newsflow light. TYH4 is dealing at 112-15+, -0-03+ compared to NY’s close on Friday. Cash US tsys are closed today for observance of the Martin Luther King Day public holiday.
• The cash JGBs are richer across benchmarks, with yields 1-5bps lower. The benchmark 10-year yield is 4.6bps lower at 0.561%, outperforming the curve. 5-year supply is due tomorrow.
• The 2-year JGB yield is at 0.1% after falling to 0% briefly for the first time since July. The move has been driven by the view that the BoJ is unlikely to tweak its monetary policy at a meeting next week following a powerful earthquake on Jan. 1.
• The results of the BoJ’s Rinban Operations covering 1-3-year and 5-25-year JGBs showed negative spreads but higher cover ratios, apart from the 10-25-year bucket. As expected, the results generated some slight support, particularly for the longer end of the curve, in the Tokyo afternoon session.
• Swap rates are lower across maturities, with swap spreads wider.