Futures Stronger, Mid-Range, Heavy Local Calendar Tomorrow

JGB futures sit in the middle of the Tokyo session range, +10 versus settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined comments from BoJ Governor Ueda in parliament regarding BoJ losses from sovereign debt holdings during an exit from monetary easing.
• JGBs slid sharply on Thursday, but the bounce on Friday helped stall any more protracted pullback, although the gap with the next resistance at 149.17 remains, according to MNI’s technical team.
• On the data front, April jobless data printed 2.6% versus expectations of 2.7%, from 2.8% prior. The job-to-applicant ratio printed in line with expectations at 1.32, unchanged from March. The data didn’t appear to have a material impact on the market.
• Cash JGBs are richer across the curve beyond the 1-year zone. The benchmark 10-year yield is 0.4bp lower at 0.438%, below the BoJ's YCC limit of 0.50%.
• The 2-year JGB is slightly richer in post-auction trade after 2-year supply sees solid demand with the low price above dealer expectations, the cover ratio higher and the tail reduced.
• Swap rates are lower across the curve with rates are 0.3-0.8bp lower. Swap spreads are tighter out to the 7-year zone and wider beyond.
• The local calendar sees Retail Sales (Apr), IP (Apr P) and Housing Starts (Apr) tomorrow.