Futures Pare Overnight Weakness, Q1 GDP Beats

JGB futures pare the overnight cheapening to be at 148.72, -12 compared to settlement levels, despite better-than-expected Q1 GDP data.

• A raft of Japan data headlines has hit. Q1 GDP has been revised higher, the q/q annualized pace to 2.7% from 1.6% prior and 1.9% expected. An upside revision was expected, but this is firmer than forecasts. The upside mainly owes to firmer business spending (1.4%, versus 0.9% prior) and inventory contribution (0.4% from 0.1% prior). Consumption was revised down a touch to 0.5% from 0.6% prior.
• Weekly investment flow data showed similar trends to recent weeks with offshore outflows from local bonds for the second consecutive week, -¥537.9bn. Japanese buying of offshore bonds remained positive at ¥524.7bn.
• Bank of Japan will discuss what to do with its holdings of ETFs when its 2% inflation goal is in sight, Governor Kazuo Ueda said in parliament yesterday, ICYMI. The BoJ will conduct policy appropriately while paying attention to fiscal health, Ueda said in response to questions from a lawmaker, according to a Bloomberg report.
• Cash JGBs are trading mixed with yield movements ranging between -1.1bp lower (5-year) to 0.6bp higher (7-year). The benchmark 10-year yield is 0.2bp higher at 0.429%, below the BoJ's YCC limit of 0.50%, ahead of today’s 5-15.5 years until maturity liquidity enhancement auction.
• Swap rates and spreads are also trading mixed in early Tokyo trade.