Cheaper & At Session Lows At Lunch, Focus On FOMC Decision Later Today

At the Tokyo lunch break, JGB futures had pushed to session lows, -25 compared to the settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Jibun Bank PMI Mfg. Tomorrow will see the BoJ Minutes of the March Meeting.
• According to MNI's technical team, a bear trend in JGB futures remains intact. The contract for now is trading above key support and bear trigger at 143.44, the Nov 1 low. A stronger reversal higher is required to signal the end of the recent downward phase. Key resistance is at 145.95, the Mar 28 high. A break would signal scope for a climb towards the bull trigger at 147.74, the mid-January high. On the downside, a move through 143.44 would strengthen a bearish condition.
• Cash US tsys are dealing 1-2bps richer in the Asia-Pac session ahead of the FOMC Policy Decision later today.
• Analysts generally look for a more hawkish message from the FOMC in May compared with March, in light of strong inflation and economic activity data. (See MNI’s FOMC Preview here)
• Cash JGBs are mostly cheaper, with yields flat to 2bps higher. The benchmark 10-year yield is 1.3bps higher at 0.892% versus the YTD high of 0.930%.
• The swaps curve has twist-steepened, pivoting at the 20s, with rates -2bps to +2bps. Swap spreads are tighter out to the 10-year and wider beyond.