Futures Cheaper, BoJ Governor Ueda’s Comments Weigh, PPI In Line

In Tokyo morning trade, JGB futures are cheaper, -14 compared to settlement levels, after comments from BoJ Governor Ueda.

• Ueda reiterated the message that the policy tightening in March wasn't a one-off event. The door remains wide open for further reduction of monetary easing measures. Additionally, the BoJ aims to gradually decrease its holdings of JGBs over time. Furthermore, there is speculation that the central bank might contemplate revising its inflation forecast upward later this month, following unexpectedly robust outcomes from the annual wage negotiations.
• March Producer Prices rose 0.8% y/y, in line with expectations, while Bank Lending data showed an acceleration, rising to 3.2% y/y (including trusts) from 3.0% prior.
• Cash US tsys are dealing little changed in today’s Asia-Pac session, after richening 4-7bps yesterday, ahead of today’s US CPI data and the release of the FOMC Minutes.
• Cash JGBs are cheaper (flat to 2bps), apart from the 10-year. The benchmark 10-year yield is 0.6bp lower at 0.793% versus the YTD high of 0.802%, set earlier in the week.
• The swaps curve has bear-steepened, with rates 1-4bps higher. Swap spreads are wider across maturities.