Futures Off Bests But Richer At Lunch, Swaps Curve Bear Steepens

JGB futures sit mid-range, +10 compared to settlement levels, at the lunch break after paring the overnight uptick seen ahead of the weekend in early Tokyo trade.

• With April’s Jibun Bank Mfg PMI (Final) failing to provide a domestic driver, the local market has been happy to trade with US tsys as they cheapen in the Asia-Pac session.
• Bloomberg reports that Barclays Plc and Goldman Sachs Group Inc. strategists have adjusted their projections for the timing of revisions to the BoJ yield-curve control policy from June to July. July is the next time the BOJ outlook report is due.
• The strong recovery from 147.27, the April 18 low, confirms the corrective nature of the pullback between March 22- April 18, according to MNI’s technical analyst. A break of 149.53, the March 22 high, would confirm a resumption of the uptrend.
• Cash JGBs are trading mixed across the curve, with the belly outperforming. Benchmark yields are 0.7bp lower to 1.9bp higher, with the 30-40-year zone experiencing weaker performance compared to the JGB futures-influenced 7-year zone, showing the strongest result. The benchmark 10-year yield is 0.3bp lower at 0.391%, well below BoJ's YCC limit of 0.50%.
• The swaps curve has bear steepened with rates 0.2-2.75bp higher. Swap spreads are wider across the curve.