Futures Sitting Weaker, Near Cheaps After PPI Beat

JGB futures sit near Tokyo session cheaps in afternoon trading, -24 versus settlement levels.

• Higher-than-expected April PPI, which came ahead of monthly CPI data later in the week, appears to have assisted today’s relatively weak performance.
• 5-year supply saw relatively smooth digestion with the low price coming in line with dealer expectations, although the cover ratio did decline, and the tail increased since last month's auction.
• Cash JGBs are 0.3-1.2bp weaker across the curve, except for the 2-year zone, with the curve steeper. The benchmark 10-year yield is 1.2bp higher at 0.402%, below the BoJ's YCC limit of 0.50%. The 5-year benchmark is 0.4bp cheaper at 0.111%, little changed from levels prevailing before the JGB supply.
• The swap curve bear steepens with swap spreads wider outside of the 1-year zone.
• The local calendar is light tomorrow ahead of Q1 GDP (preliminary) on Wednesday and National CPI on Friday.
• BoJ Rinban operations covering 1-10-year and 25-Year+ JGBs are scheduled for tomorrow ahead of 20-year JGB supply on Wednesday.
• Further afield, the global calendar is light ahead of tomorrow’s data dump in China, the Euro Area's Q1 GDP and US Retail Sales.