Futures Unchanged Despite Better-Than-Expected Q1 GDP Data

JGB futures are unchanged versus settlement levels, reversing the overnight downtick, in early Tokyo trade despite a much stronger than expected GDP data. Q1 GDP printed an annualised +1.6% q/q (+0.8% est.) after a technical recession at the end of last year following a revision to earlier figures. The faster-than-expected pace was driven by a further easing of pandemic regulations boosting consumption. The better-than-expected outcome will likely keep speculation simmering of a possible early election and potential central bank policy change. The latter may be tempered by the GDP deflator that printed +2.0% y/y compared to an expectation of +2.1%.

• March Industrial Production (final) and March Capacity Utilisation will be released later today.
• Cash JGBs are richer beyond the 1-year zone with yields 0.1-1.2bp lower and the yield curve flatter. The benchmark 10-year yield is 0.5bp lower at 0.392%, below the BoJ's YCC limit of 0.50%. Ahead of supply today, the 20-year yield is 1.0bp lower at 1.003%, showing no sign of concession as it outperforms on the curve.
• Swaps curve twist flattens with swap spreads wider out the 20-year zone and tighter beyond.