At the Tokyo lunch break, JGB futures are stronger, +11 compared to the settlement levels, and well above the morning session’s low.

• Japan's June jobs data showed a slight downtick in the unemployment rate to 2.5%, from 2.6% prior, while the consensus forecast was also 2.6%. The job-to-applicant ratio was 1.23, versus the 1.24 forecast (prior was also 1.24).
• Still, the downtick in the new job-to-applicant ratio was less positive. This is a fresh low in the job-to-applicant ratio back to early 2022. It suggests some caution around the better jobless rate data.
• Cash JGBs are slightly mixed across benchmarks, with yield swings bounded by +/- 1bp. The benchmark 10-year yield is 0.1bp lower at 1.026% versus the cycle high of 1.108%.
• The swaps curve has twist-steepened, with rates 1bp lower to flat.
• Tomorrow, the local calendar will see the BoJ Policy Meeting, with markets keenly observing any steps the central bank may take towards monetary policy normalisation. The BoJ is anticipated to unveil a detailed plan for reducing the pace of its bond purchases over time.
• Regarding policy rate settings, we anticipate the BoJ will maintain its target for the overnight uncollateralized call rate, consistent with consensus. That said, it appears a close call.
• See MNI BoJ Preview here.