Futures Holding Overnight Uptick, Cash Twist Flattens

JGB futures are holding the overnight session's uptick, +14 compared to settlement levels, after the morning's data drop generating very little market reaction.

• Japan’s March current account surplus undershoots expectations printing Y2278.1bn with the April trade balance showing a worse-than-expected deficit of 454.4bn. Bank lending rose 3.2% m/m in April after +3.0% in March. Weekly investment data for the week ending May 5 showed Y216.5bn of bond outflows, offsetting some of the Y329.3bn inflows seen in the final week of April.
• In the BoJ Summary of Opinions for the April meeting, the BoJ noted Japan's economy has been resilient, but the effects of slowdowns in overseas economies need to be closely monitored. CPI is expected to remain high due to past price increases in commodities, inflation overseas, and labour shortages. The bank should continue with current monetary easing and focus on achieving wage increases to achieve the price stability target of 2%. While price projections have been raised slightly, the Bank should be careful not to hastily revise monetary easing to avoid missing the chance to achieve the 2% target (link).
• The cash JGB curve twist flattens with yields 0.6bp higher to 1.7bp lower. The benchmark 10-year yield is 1.1bp lower at 0.414%, below the BoJ's YCC limit of 0.50%.
• Swap rates are lower across the curve with swap spreads wider, other than for the 1-year zone.
• The MoF plans to sell Y900bn 30-year JGB supply today.