Futures Holding Overnight Strength, Light Local Calendar

JGB futures are holding at the overnight session’s closing level, +8 compared to settlement levels, after trading in a narrow range in early Tokyo trade.

• With the local calendar light today, local participants will be on headlines watch and monitoring US tsys after the US cash curve twist flattened on Tuesday. Cash tsys are 0.1 to 1.7bp cheaper in early Asia-Pac trade.
• Inflation expectations should be around 2% once the central bank’s 2% price target is met, BoJ Governor Ueda says in parliament yesterday. The BOJ has consistently stated that it will maintain its easing program until its price goal is achieved in a stable manner, Ueda says in response to questions. (linkICYMI)
• According to a Bloomberg article, the spread between the June contract for 10-year bond futures and the cheapest-to-deliver securities shrank this month to the lowest level since the contracts began trading in September. The smaller gap indicates there’s now enough liquidity for traders to arbitrage between bonds and futures. (link)
• BoJ Governor Ueda is scheduled to appear in parliament from 0530 BST / 1330 JST.
• The cash JGB curve twist flattened in morning Tokyo trade, pivoting at the 3-year zone. The benchmark 10-year yield is 0.4bp lower at 0.422%.
• Swaps curve bear steepens with swap spreads are wider apart from the 10-year zone.