Futures Holding Overnight Weakness In Morning Trade

JGB futures are holding the overnight weakening in early Tokyo trade, -19 versus settlement levels. Futures had initially spiked higher on the back of weaker-than-expected export and import data in April.

• Exports rose by 2.6% compared to the same period last year, weaker than the 4.3% increase marked in March and below the 4.5% increase expected. The result was primarily due to a decrease in shipments to Asia and China.
• Imports fell for the first time in more than two years as commodity prices softened. The value of imports decreased 2.3% from a year earlier in April versus expectations of -0.6%.
• Japan securities transactions showed a total net outflow of 589.8 billion yen for the week ended May 12 as reported by the MoF on its website. Foreign investors bought Y1.1tn in Japanese bonds.
• Cash JGBs are mixed across the curve with yield changes ranging from -0.7bp (2-year) to +1.0bp (7-year). The benchmark 10-year yield is 0.5bp higher at 0.375%, well below the BoJ's YCC limit of 0.50%. The 20-year yield is 0.1bp lower at 0.975%, after yesterday's auction-induced decline of 3.7bp.
• BoJ Rinban operations covering 1-10-year and 25-Year+ JGBs along with an auction of Y3.5tn 12-month bills are slated for today.
• The swap curve bear steepens with rates 0.1bp to 0.8bp higher. Swap spreads are wider except for the 7-year zone.