Cash Bonds Dealing Mixed After Mixed Local Data

In Tokyo morning trade, JGB futures are holding stronger, +11 compared to settlement levels, after initially weakening in the early rounds on trading.

• Q1 Capex spending eased back to +6.8% from +16.4% in Q4, against an 11.0% forecast. In q/q terms, capital spending fell -4.2% (after a +10.7% rise in Q4 last year).
• Both the manufacturing and non-manufacturing saw falls in Capex. Manufacturing was down -3.3%q/q, while non-manufacturing off -4.7%. Both measures are still positive in y/y terms.
• The capex data will feed into GDP revisions for Q1, which will print on June 10. In the initial GDP report, business spending was down -0.8% q/q.
• Other data released showed better-than-expected company profits, up 15.1% y/y, versus 8.3% forecast. Company sales were close to expectations at 2.3% y/y (2.4% was the forecast).
• Cash JGBs are dealing mixed, with yield movements bounded by +/- 1bp. The benchmark 10-year yield is 0.1bp higher at 1.071% versus the cycle high of 1.101% set late last week.
• Swaps are dealing slightly mixed too, with the 3-7-year zone outperforming. Swap spreads are mixed.