Futures Back To Overnight Highs After Smooth Digestion Of 30-Year Supply

JGB futures move back towards overnight highs, +15 Vs. settlement levels, after the 30-year supply sees smooth digestion. The JGB 30-year has richened 2.0bp in post-auction trade, taking out the morning’s best level, to be 2.8bp lower on the day at 1.242%. Local participants adjusting portfolios out of hedged offshore debt in Yen bond holdings may have proved to be a supportive factor, although it didn’t play heavily at this week’s 10-year auction.

• There hasn’t been much in the way of domestic drivers to flag, outside of the BoJ Summary of Opinions for the April meeting. One member said the bank needs to humbly monitor developments in wages and inflation and respond to them at the right moment.
• At 148.74, JBM3 is still positioned within a range of 147.92 (the upper limit of April's trading range) and 149.53 (the high point of March 22).
• The cash JGB curve twist flattens with yields at session bests, 0.6bp higher (1-year) to 3.5bp lower (40-year). The benchmark 10-year yield is 2.1bp lower at 0.404%, below the BoJ's YCC limit of 0.50%.
• Swap rates are lower across the curve with swap spreads wider, other than for the 1-year zone.
• The local calendar is slated to release tomorrow Money Stock (M2 & M3) data and with 3-month bank bill supply and BoJ Rinban Purchase Offer for 1–3-year, 5-10-year, 10-25-year, and 25-year+ JGBs.