Bear-Steepener, Economy Avoids Technical Recession

In Tokyo morning trade, JGB futures are holding weaker, -22 compared to settlement levels, but higher than overnight closing levels seen on Friday.

• (Bloomberg) -- Japan revised economic data higher, reversing a quarterly contraction into positive growth and thereby avoiding a technical recession, an outcome that supports the case for the central bank to end its negative interest rate policy this month or next. (See link)
• Also M2 & M3 Money Stock grew 2.5% y/y and 1.8% y/y versus 2.5% and 1.8% prior.
• (Bloomberg) -- Japan’s yield curve bear-steepens after Jiji Press reported that the central bank may abolish its yield-curve-control program and negative-interest-rate policy as early as this month.
• Cash JGB yields are 1-4bps higher across benchmarks. The benchmark 10-year yield is 3.2bps higher at 0.767% after earlier testing the highest level for the year at 0.772%.
• The swaps curve has twist-steepened, pivoting at the 7s, with rates 1bp lower to 3bps higher. Swap spreads are tighter.