Cheaper With Futures-Linked 7Y Leading, Light Local Calendar

At the Tokyo lunch break, JGB futures are weaker and at session lows, -41 compared to the settlement levels.

• The local calendar is empty today, ahead of Jibun Bank PMIs and 2-year supply tomorrow.
• The market’s focus for this week, however, is the BoJ Policy Decision on Friday. No policy adjustment is anticipated at the two-day meeting ending on April 26, following last month's decision to raise rates for the first time since 2007.
• (MNI) Bank of Japan officials believe the weak yen will drive an inflation rebound over the northern summer, sooner than bank economist expectations of an autumn bottom, which could drive the Board to consider raising its policy rate pre-emptively to keep ahead of the curve, MNI understands. (See link)
• Bloomberg reported that Japanese banks bought the smallest amount of government bonds in fiscal 2023 in five years. Major, regional and Shinkin banks combined purchased a net ¥1.52 trillion ($9.8 billion) of debt in the period ended March 31, based on data from Japan Securities Dealers Association.
• Cash JGBs are cheaper across the curve, with the 7-year underperforming (yield +3.1bps). The benchmark 10-year yield is 2.1bp higher at 0.872% versus the YTD high of 0.891%.
• The swap curve has bear-steepened, with rates 1-4bps higher. Swap spreads are mixed.