Futures Sitting Near Cheaps At Lunch, Awaits 5-Year Supply

JGB futures sit near Tokyo session cheaps at the lunch break, -17 versus settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined upside surprise in April’s PPI, ahead of monthly CPI data later in the week. At the margin, the data is likely to have contributed to today’s weak performance, ahead of 5-year JGB supply.
• During a speech in Tokyo, Prime Minister Kishida emphasized the Japanese government's commitment to achieving structural wage gains. He also announced that the public sector would work closely with the Bank of Japan in managing the economy and that public sector investments would be directed towards areas that lack sufficient investment.
• Cash JGBs are 0.2-1.5bp weaker across the curve, except for the 2-year zone, with the curve steeper. The benchmark 10-year yield is 0.1bp higher at 0.399%, below the BoJ's YCC limit of 0.50%. The 5-year benchmark is 0.5bp cheaper at 0.112%, ahead of this afternoon's 5-Year JGB supply, showing little sign of concession.
• The swap curve bear steepens with swap spreads wider outside of the 1-year zone.