[MARKET ANALYSIS] JGBs continue to fall ahead of 20-year auction

• UST Futures continues to hold onto losses seen in Monday’s futures session amid the absence of cash trade.
• Bund Futures have completely reversed the haven-bid seen in Monday’s session, as the OAT-Bund spread continues to tighten following the use of Article 49.3 by French PM Lecornu to push through the budget.
• JGB Futures briefly dipped below the 131 handle, as 40-year JGB yields hit its highest point since its debut in 2007. This comes ahead of the highly-anticipated 20-year JGB auction.

The continued decline in JGB futures indicates growing upward pressure on yields, particularly with the 40-year JGB hitting a 16-year high as traders brace for the 20-year auction. This scenario suggests a shift in market sentiment, likely reflecting concerns over supply and prevailing interest rate dynamics, which could influence future expectations for Japanese monetary policy.