Futures Off Lows, Wings Cheapen A Touch

JGB futures saw a brief and shallow look below overnight lows at the Tokyo re-open as participants reacted to Tuesday’s wider core FI market dynamics, before a slightly defensive feel and bid for wider core FI dragged the contract higher, meaning that it hit the lunch bell -2 vs. yesterday’s settlement

• Cash JGBS are little changed to 1bp cheaper across the curve, with the 7- to 10-Year zone presenting the firmest point, which is likely linked to the bid in futures and the proximity of 10-Year yields to the upper limit of the BoJ’s permitted trading band.
• Note that preliminary Q1 Japanese GDP data wasn’t quite as soft as feared, with the saving grace coming as private consumption topped exp. (albeit only printing at flat levels in Q/Q terms).
• 5-Year JGB supply headlines this afternoon.