Futures Extend Post-Tokyo Downtick Ahead Of 5-Year Supply

JGB futures are softer in early Tokyo trade, extending Friday’s post-Tokyo downtick to be -17 versus settlement levels. The recent price action shows JBM3 trading at 148.79, after briefly trading above 149.0 on Friday following strength in US tsys and robust demand for 30-year supply on Thursday.

• Last Friday, JBM3 hit a high of 149.21, which came close to the March 22 high and bull trigger at 149.53, according to MNI's technical team.
• April’s PPI rises more than expected, 0.2% m/m and 5.8% y/y versus expectations of 0.0% and 5.6%, ahead of monthly CPI data later in the week.
• Cash JGBs are 0.2-1.8bp weaker across the curve, except for the 2-year zone, with the curve steeper. The benchmark 10-year yield is 0.2bp higher at 0.40%, below the BoJ's YCC limit of 0.50%. The 5-year benchmark is 0.4bp cheaper at 0.111%, ahead of this afternoon's 5-Year JGB supply, showing no sign of concession as it outperforms on the curve.
• The swap curve bear steepens with swap spreads wider outside of the 1-year zone.