Futures Holding Overnight Strength In Early Tokyo Trade

JGB futures sit at +8, holding the overnight uptick. The better-than-expected trade balance for March (-Y754bn Vs. -Y1.3tn expected) didn’t appear to weigh on JGBs at the Tokyo open. Although exports beat expectations, the market may have focused on the materially weaker-than-expected import growth as a sign of weaker domestic demand.

• There is little guidance from US Tsys which have opened flat from NY closing levels.
• Cash JGB curve twist flattens with 1- and 2-year yields 0.3-0.7bp cheaper and 3-year yields and beyond 0.7-2.3bp richer. The benchmark 10-year yield is 1.1bp lower at 0.477%, below the BoJ's YCC limit of 0.50%.
• Swap spreads are tighter across the curve.
• Particpants eye this afternoon's 20-Year JGB supply.