Futures Back Towards Neutral

JGB futures sit -1, paring the modest overnight uptick, with Tokyo participants failing to better the post-Tokyo high thus far.

• The release of the Reuters Tankan survey for April, which showed big Japanese manufacturers remaining gloomy for a fourth straight month, failed to provide a meaningful catalyst for the local market. That said, it does appear to have provided an offset for the slightly cheaper pricing for US Tsys in Asia-Pac trade.
• Cash JGBs are 0.2-1.7bp richer with the 2/10 curve little changed and the benchmark 10-year yield 0.3bp lower at 0.472%, below the BoJ's YCC limit of 0.50%.
• Swap spreads are slightly wider across the curve, with the swap curve twist flattening.