[MARKET ANALYSIS] Fixed income benchmarks muted with upcoming JGB auction set to prove tricky
- UST Futures initially started modestly higher but since pared back and now trades around the unchanged mark. This comes ahead of a 3-year note auction, in which the lower yield on offer should present a modest headwind for demand. For reference, the 3-year yield currently trades at 4.15%, below the previous auction high yield.
- Bund Futures trade ever-so-slightly lower and has found a base just shy of Monday’s 126.45 low. Following on from the stronger-than-expected Factory Orders, May’s Industrial Production figure is expected to hold steady of 0.4%.
- JGB Futures outperform their peers, despite the modest downside at the start of trade. Wages rose in May with nominal wages printing at 3.2%, weaker than forecasted, but held above 3% for a fourth straight month. The mixed wage data comes ahead of a 30-year bond auction, which may have a poor outcome after BoJ buying operations on Monday showed investors lining up to sell long-end JGBs back to the BoJ.
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