LOOK AHEAD: Eurozone Timeline of Key Events (BST)

JGB futures are holding an uptick, +2 compared to settlement levels, after 10-year supply was smoothly absorbed, with the low price matching wider expectations and the tail shortening. The cover ratio however declined to 3.239x from 3.648x at February’s auction. It is worth noting that today’s cover ratio remains higher than December’s, which was the lowest seen at a 10-year auction since 2021.

• With an outright yield similar to the February outing, growing expectations that the BoJ could remove NIRP as early as this month (18-19 March) possibly weighed on the bid at today’s auction.
• It was also notable that the relative affordability of 10-year JGBs compared to futures, as indicated by the spread between the 7- and 10-year JGBs, was around its highest point since 2015.
• There hasn’t been much in the way of domestic data drivers to flag, outside of the previously outlined Tokyo CPI.
• Cash JGBs are dealing mixed, with yields 1.2bps lower (20-year) to 1.3bps higher (30-year). The benchmark 10-year yield is 1.0bp lower at 0.709% versus the Nov-Dec rally low of 0.555%.
• Swaps are richer, with the belly of the curve slightly outperforming (rates 1bp lower). Swap spreads are tighter apart from the 10-20-year zone.
• Tomorrow, the local calendar is empty.

ACGBs (YM -1.0 & XM -0.5) sit slightly cheaper after dealing in narrow ranges during today’s Sydney session. Once again, the domestic data drop (Q4 Net Exports, Current Account Balance and Government Consumption & Capex) failed to move the market as it awaits Fed Chairman Powell's policy testimony to Congress Wed-Thu and the Payrolls Report Friday.

• Cash US tsys are dealing little changed in today's Asia-Pac session after yesterday's bear-flattening. Tuesday’s US data calendar includes S&P Final PMIs, ISM Services and Factory Orders.
• (AFR) A sharp decline in the number of Australians travelling overseas and a large fall in imports of consumer goods like toys, clothes, cars and appliances may have prevented the economy from contracting in December. (See link)
• Cash ACGBs are flat to 1bp cheaper, with the AU-US 10-year yield differential 1bp lower at -11bps.
• Swap rates are 1bp higher to 1bp lower, with the 3s10s curve flatter.
• The bills pricing is -1 to -2.
• RBA-dated OIS pricing is little changed.
• Tomorrow, the local calendar sees Q4 GDP.
• Tomorrow, the AOFM plans to sell A$800mn of 2.75% Nov-29 bond.

The 10-year JGB auction was smoothly absorbed, with the low price matching wider expectations (which stood at 98.88, per the BBG dealer poll) and the tail shortening. However, the cover ratio declined to 3.239x from 3.648x at February’s auction. It is worth noting that today’s cover ratio remains higher than December’s, which was the lowest seen at a 10-year auction since 2021.

• As highlighted in the auction preview, today’s 10-year auction took place with an outright yield that was approximately the same as the early February offering.
• It was also notable that the relative affordability of 10-year JGBs compared to futures, as indicated by the spread between the 7- and 10-year JGBs, was around its highest point since 2015.
• The 2/10 yield curve was however around 5bps flatter relative to the February auction level and only slightly steeper than the December low, which was the flattest since July 2023.
• Growing expectations that the BoJ could remove NIRP as early as this month (18-19 March) possibly weighed on the bid at today’s auction.
• In early Tokyo afternoon trade, the cash 10-year JGB is around 1-1.5bps richer than lunch levels.
• JGB futures have gapped higher to a Tokyo session high in afternoon dealings, +2 compared to settlement levels.