Futures Lower, US Tsys Pressured By Higher ISM Prices Paid

In post-Tokyo trade, JGB futures are weaker, closing at -17 compared to settlement levels, adding to yesterday’s partial unwind of post-BoJ Decision gains. US tsys finished 12-15bp cheaper across the curve after being pressured by much stronger than expected ISM Manufacturing Prices Paid component (53.0 Vs. 49.0). Additionally, JP Morgan agreed to acquire First Republic Bank in a government-led deal with JP Morgan and the FDIC agreeing to share the burden of losses.

• Despite the overnight weakness, JBM3 currently sits at 148.35, sandwiched between the April trading range's top at 147.92 and the March 22 high at 149.53. Technical analysis from MNI suggests that breaking the March 22 high would signal the continuation of the uptrend. To the downside, the 50-dma provides support at 147.31, just above the April 18 low.
• The BoJ released its full quarterly economic report yesterday with the bank indicating that it has more confidence in wage increases for this fiscal year, a shift that is “likely to underpin private consumption.”
• The local calendar is light with Monetary Base data for April as the highlight.
• The MoF is also scheduled to sell Y6.3tn 3-month bills and conduct a Liquidity Enhancement Auction For OTR 1-5 Year JGBs.