Awaiting Some Domestic Impetus

JGB futures generally followed the lead of U.S. Tsys in overnight dealing, which allowed the contract to finish +1, at the mid-point of its post-Tokyo range. The U.S. Tsy curve twist steepened on Monday, although the spill over of that impulse may be limited by the Japanese beta to Tsy moves and apparent willingness of life insurers to deploy capital in the super-long end.

• Note that a RTRS report which crossed late on Monday noted that “Japan's government is set to craft a first extra budget for this fiscal year to next March worth Y2.7tn, featuring steps to cope with surging oil prices and to be funded with deficit-covering bond issues, a draft seen by Reuters showed. The extra budget will be approved by the cabinet on Tuesday.” This essentially confirmed a Nikkei report that was released over the weekend.
• Elsewhere, Yomiuri reported that Japan will start to accept small “test” groups of foreign tourists at some point in May, as the company looks to re-open.
• BoJ Deputy Governor Amamiya is set to appear in front of the Diet this morning.
• A reminder that the BoJ will continue to conduct fixed rate operations on a daily basis, as it looks to reinforce the upper limit of its -/+0.25% 10-Year JGB yield trading band (10-Year JGB yields last sit at ~0.245%).