Futures Back To Overnight Lows, Pressured By US Tsys & ACGBs

JGB futures sit near Tokyo session lows, -14 versus settlement levels as cross-market spill over from ACGBs as the RBA unexpectedly raised the cash rate 25bp. Us tsys were pressured to session lows after the RBA decision, 2-3bp off bests.

• Without significant domestic drivers, local participants seem to have been focusing on US tsys ahead of the Euro Area CPI release for April later today, as well as the FOMC policy decision tomorrow.
• Despite the overnight weakness, JBM3 currently sits at 148.38, sandwiched between the April trading range's top at 147.92 and the March 22 high at 149.53.
• Cash JGBs are 0.2bp richer to 2.9bp cheaper across the benchmarks with the 1-year zone the strongest and the 20-year zone the weakest. The benchmark 10-year yield is 1.9bp higher at 0.426%, well below the BoJ's YCC limit of 0.50%.
• Any impetus from solid demand at the latest liquidity enhancement auction covering off-the-run 1- to 5-Year JGBs appears to have been countered by the RBA-Induced cheapening in US tsys.
• Swaps curve twist steepens with swap spreads slightly tighter to slightly wider across the curve, except for the 20-year zone where the swap spread was materially tighter.
• With the local calendar light this week, local participants will continue to eye US tsys ahead of the FOMC decision tomorrow.