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Solid Demand At Linker Auction, 10yr Yield At Highest Levels Since 2013

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JGB futures got to lows of 143.78 post the lunchtime break, but we have since stabilized somewhat. JBM4 was last around 143.81, -.26, generally maintaining a downside bias in the first part of trade today.

  • Downside focus will be on recent lows near 143.70. There has been little spill over from US Tsys today, with 10yr futures largely tracking sideways.
  • The 10yr linker auction drew a strong bid to cover ratio of 4.27 (the highest since 2007). The broader backdrop is also focused on the BoJ outlook, with the latest MNI interview with an ex BoJ official noting we could see a cut to BoJ bond purchases at the June meeting (see this link).
  • Cash JGB yields remain on the front foot, with the 10yr up to 0.975%, fresh highs going back to 2013. We continue to see firmer yield gains at the back end of the curve, the 20-40yr tenors seeing yield gains of around 3bps. The 10yr swap rate is back near 1.025.
  • Tomorrow the data calendar is relatively light.
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JGB futures got to lows of 143.78 post the lunchtime break, but we have since stabilized somewhat. JBM4 was last around 143.81, -.26, generally maintaining a downside bias in the first part of trade today.

  • Downside focus will be on recent lows near 143.70. There has been little spill over from US Tsys today, with 10yr futures largely tracking sideways.
  • The 10yr linker auction drew a strong bid to cover ratio of 4.27 (the highest since 2007). The broader backdrop is also focused on the BoJ outlook, with the latest MNI interview with an ex BoJ official noting we could see a cut to BoJ bond purchases at the June meeting (see this link).
  • Cash JGB yields remain on the front foot, with the 10yr up to 0.975%, fresh highs going back to 2013. We continue to see firmer yield gains at the back end of the curve, the 20-40yr tenors seeing yield gains of around 3bps. The 10yr swap rate is back near 1.025.
  • Tomorrow the data calendar is relatively light.