Futures Hold Uptick, Tight Range, Awaits US CPI

JGB futures sit slightly firmer in Tokyo’s afternoon session, +7 compared to settlement levels.

• Without meaningful domestic drivers, local participants have been on headline watch ahead of US CPI later today.
• BoJ Governor Ueda, in today’s appearance in Parliament, said it was premature to talk about specifics on what to do with holdings of ETFs since it would take more time to achieve the stable and sustainable 2% price target.
• The preliminary Leading Indicator for March came in slightly lower than expected at 97.5, while the Coincident Indicator was in line with expectations at 98.7.
• JBM3 is currently trading at 148.53, which is within the range of 147.92 (the upper limit of April's trading range) and 149.53 (the high point of March 22). This range has continued throughout May so far.
• Cash JGBs are richer across the curve, except in the 1-year zone which is 0.6bp cheaper. Yields are 0.2-0.9bp lower with the cash curve flatter. The benchmark 10-year yield is 0.6bp lower at 0.42%, below the BoJ's YCC limit of 0.50%.
• Swap rates are 0.5-0.8bp lower across the curve with the 10-year zone outperforming. Swap spreads tighter out to the 10-year zone and wider beyond.
• The local calendar sees the release of Trade Balance (Mar) and MoF’s Investment Flows (May 5) data along with 30-year JGB supply.