Bull-Flattener Ahead Of BoJ Rinban Operations

In Tokyo morning trade, JGB futures holding overnight losses, -8 compared to settlement levels.

• Japan's real household spending rose 0.5% y/y in April. This was in line with consensus expectations and against a -1.2% dip in March. This is the first y/y rise in household spending since February last year. The authorities/BoJ will be hoping this is the start of more positive real spending trends.
• Today's local calendar will also see Coincident and Leading Indices along with BoJ Rinban Operation covering 1-3-year and 5-25-year JGBs.
• (MNI) Tokyo - The BoJ is likely to consider a reduction in its government bond purchases from around JPY6 trillion a month by as soon as its June 13-14 meeting, barring further yen weakening, with officials noting that easing U.S. Treasury yields would help reduce the market impact of such a move, MNI understands. (See link)
• Cash JGBs are little changed out to the 10-year and 1-3bps richer beyond, with the 40-year leading. The benchmark 10-year yield is 1bp lower at 0.962% versus the cycle high of 1.101% set last week.
• The swaps curve has slightly bull-flattened, with rates flat to 1bp lower. Swap spreads are mixed.