[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.