Futures At Lows At Lunch After Gov. Ueda’s Comments

JGB futures sit at session lows at the lunch break, -24 versus settlement levels.

• Domestically, there have been few market catalysts of note aside from BoJ Governor Ueda's recent remarks in Parliament. Alongside his earlier statement that the central bank is not prioritising any specific policy during its comprehensive policy review, Ueda cited encouraging trends in inflation and suggested that the BoJ may end Yield Curve Control once the 2% inflation target is reached in a stable and sustainable manner. These comments seemed to contribute to a sell-off during the latter part of the morning session, given it coincided with a modest uptick in US tsys.
• Lower-than-expected prints for March Household Spending, Labour Cash Earnings and Real Cash Earnings failed to provide meaningful support for the market.
• Cash JGBs have cheapened across the curve, except for the 30–40-year zone, which has seen a 0.4-0.5bp richening. Yields are 0.1-1.3bp higher, with the 1-year zone showing the weakest performance and the 3-year zone showing a relatively stronger performance.
• The benchmark 10-year yield has increased by 0.6bp to 0.424%, ahead of 10-year supply.
• Swap rates are higher across the curve with wider swap spreads, apart from the 1-year and 20-year zones.