JGB futures are unchanged, flat compared to the settlement levels, dealing in the middle of the Tokyo session range. The morning session saw the sell-off sparked by the much stronger-than-expected Q2 GDP print unwound. However, lacklustre demand seen at the 5-year auction saw futures weaken again in the Tokyo afternoon session.

• The 5-year auction faced a lacklustre reception with pricing falling short of dealer expectations. The lack of demand was also reflected in the cover ratio falling to the lowest level observed at a 5-year auction since March. Adding to these concerns, the tail also grew longer, marking its most extended length since March.
• Cash JGBs are cheaper across the curve beyond the 1-year, with yield movements ranging from flat (3-4-year zone) to +1.3bp (10-year). The 10-year yield is at 0.625%, above BoJ's YCC old limit of 0.50% but below its new hard limit of 1.0%.
• The swap curve bear steepened, with rates 0.2bp higher to 1.6bp higher. Swap spreads are wider, apart from the 7-10-year.
• Tomorrow the local calendar is light with Department Store Sales as the highlight.
• Tomorrow also sees BoJ Rinban operations covering 1-3-year, 5-10-year and 25-Year+ JGBs.