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Futures Sub Monday Lows, PPI A Touch Above Forecasts

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BulletMarketsFixed Income BulletsHomepageBank of Japan (BOJ) Market News

JGB futures have fallen through Monday lows in early Tuesday dealings. JBM4 was last 143.86, -.10, slightly up from earlier lows of 143.82.

  • Focus is likely to rest on late April lows at 143.61. JGB futures are underperforming US Tsy futures, which have had a relatively steady start to Tuesday trade.
  • JGB yields are higher across the benchmarks, led by the back end. The 10yr is above 0.95% (+1.5bps firmer), which is fresh highs back to early Nov last year. 20-40yr tenors are around 2-2.5bps higher. The 10yr swap rate was around 1.02% in recent dealings.
  • On the data front the PPI was a touch firmer than expected. We rose 0.3% m/m, (0.3% forecast and 0.2% prior), but in y/y terms we came in at 0.9% (0.8% was the forecast). The prior month was revised up to a 0.9% gain as well.
  • Import prices rose 6.4% y/y on a yen basis in April for the third straight rise following 1.4% in March. BOJ Governor Kazuo Ueda said that the BOJ is carefully watching the impact of the weak yen on prices, including whether it will increase upside risk to prices (see more from our policy team here).
  • Later on we have the 5yr debt sale.
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JGB futures have fallen through Monday lows in early Tuesday dealings. JBM4 was last 143.86, -.10, slightly up from earlier lows of 143.82.

  • Focus is likely to rest on late April lows at 143.61. JGB futures are underperforming US Tsy futures, which have had a relatively steady start to Tuesday trade.
  • JGB yields are higher across the benchmarks, led by the back end. The 10yr is above 0.95% (+1.5bps firmer), which is fresh highs back to early Nov last year. 20-40yr tenors are around 2-2.5bps higher. The 10yr swap rate was around 1.02% in recent dealings.
  • On the data front the PPI was a touch firmer than expected. We rose 0.3% m/m, (0.3% forecast and 0.2% prior), but in y/y terms we came in at 0.9% (0.8% was the forecast). The prior month was revised up to a 0.9% gain as well.
  • Import prices rose 6.4% y/y on a yen basis in April for the third straight rise following 1.4% in March. BOJ Governor Kazuo Ueda said that the BOJ is carefully watching the impact of the weak yen on prices, including whether it will increase upside risk to prices (see more from our policy team here).
  • Later on we have the 5yr debt sale.