Weakness Pared Ahead Of US Payrolls Tonight

At the Tokyo lunch break, JGB futures have pared overnight weakness to a downtick of -4 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Monetary Base and Jibun Bank Services & Composite PMI data. Consumer confidence is due later but is unlikely to be a market mover either.
• Accordingly, local participants appear to have been content to fade overnight US tsy-induced weakness through the morning session ahead of tonight’s release of US Non-Farm Payrolls.
• Bloomberg consensus sees nonfarm payrolls growth of 171k in December after November’s 199k was boosted by 38k workers returning from strikes. See MNI's NFP Preview here.
• Cash US tsys are dealing little changed in today’s Asia-Pac session after yesterday’s 5-8bps cheapening.
• Cash JGBs are now only slightly cheaper across the curve, with yields largely flat apart from the 5-7-year zone, which is ~1bp cheaper. The benchmark 10-year yield is 0.3bp higher at 0.618% versus the Nov-Dec rally low of 0.555%.
• Swap rates are flat to 1bp lower apart from the 40-year, which is 0.5bp higher. Swap spreads are tighter out to the 30-year and wider beyond.