Futures Pare Gains Seen Ahead Of The Weekend In Tokyo Trade

JGB futures pare post-Tokyo uptick seen ahead of the weekend to be +11 versus settlement levels.

• April’s Jibun Bank Mfg PMI (Final) printed unchanged at 49.5 but failed to move the market.
• Without meaningful local headlines after Friday’s strong post-BoJ decision strengthening, local participants appear content to eye US Tsys, which have weakened 1-4bp across major benchmarks in early Asia-Pac trade.
• Cash JGBs are trading mixed across the curve, with the belly outperforming. Benchmark yields are 1.1 bp lower to 0.5bp 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 0.6bp lower at 0.388%, well below BoJ's YCC limit of 0.50%.
• A Bloomberg survey of market forecasts sees the 2/10 cash JGB curve steepening to 55bp by the end of Q2 from its current level of 43bp.
• The swaps curve has steepened with rates flat to 2.0bp higher. Swap spreads are wider across the curve.
• Rising inflation and an intensifying labour crunch are prodding local SMEs to follow their big counterparts in raising pay, a move that may generate broader wage hikes, according to a Reuters article today.
• Elsewhere, China’s Official Manufacturing PMI, released on Sunday, declined to 49.2 from 51.9 in March. The Non-Manufacturing PMI also fell to 56.4 from 58.2.