Futures Weaker In Afternoon Trade

JGB futures weaken in Tokyo afternoon trade with pricing, -15 compared to settlement levels, after today’s 5-15.5 years until maturity liquidity enhancement auction showed less demand than the previous outing with mixed internals (better spread dynamics but a lower cover ratio).

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined Q1 GDP (Final) data, which surprised on the upside.
• JGB futures continue to operate close to recent lows, with 148.48 marking the near-term support. According to MNI's technicals team, the recent bounce off the lows helped stall a more protracted pullback, although the gap with key resistance at 149.17 remains.
• In the afternoon Tokyo session, cash JGBs are trading cheaper across the curve apart from the 1-year and 7-year zone which are respectively 0.4bp and 0.7bp richer. The benchmark 10-year yield is 0.6bp higher at 0.433%. The underperformer on the curve is the 40-year zone which sees its yield 1.3bp higher at 1.462%.
• Swap rates are higher across the curve apart from the 10-year rate, with yield movements ranging from 0.3bp to 2.1bp higher. The 10-year rate is 0.3bp lower. Swap spreads are wider across the curve.
• The local calendar tomorrow is light with M2 & M3 data as the only releases.
• Tomorrow will also see BoJ Rinban operations covering 1-5-year, 5-10-years and 25-year+ JGBs.