Futures Around Session Highs After Domestic Data Drop

In Tokyo morning trade, JGB futures are sharply higher, 54 compared to settlement levels, after dealings resumed after yesterday’s public holiday.

• Japan's March job data was mixed. The jobless rate was at 2.6%, against a 2.5% forecast but unchanged from Feb's outcome. The job-to-applicant ratio was 1.28, against a 1.26 forecast and 1.26 prior. The broader labour market picture is unchanged compared to late 2023 trends. Arguably we need to see much higher job-to-applicant ratio levels to bring about a lower unemployment rate (i.e. back to pre-Covid levels).
• Other data showed retail sales for March weaker than forecast: -1.2% m/m and down to 1.2% y/y. IP was close to forecast at +3.8% m/m, but still -6.7% y/y. METI expects solid April and May gains for IP.
• Cash US tsys are slightly richer across benchmarks, continuing the rally since Thursday’s Q1 PCE Deflator-induced low.
• Cash JGBs are richer for most maturities, with yields flat to 2bps lower. The benchmark 10-year yield is 1.9bps lower at 0.872% versus the YTD high of 0.930%.
• The swaps curve has bull-flattened, with rates flat to 2bps lower. Swap spreads are wider out to the 10-year and tighter beyond.