Holding At Session Lows At Lunch, 20Y Supply Due

At the Tokyo lunch break, JGB futures have extended overnight weakness, -46 compared to settlement levels, after setting a new pullback low of 144.60 following a solid post-US CPI sell-off.

There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined International Investment Flow and Money Stock data. The vacancy rate for Tokyo office space fell to 5.47 percent in March.

• (Bloomberg) -- Japan’s 10-year sovereign yield reached its highest level since November after faster-than-expected US inflation data boosted US Treasury yields overnight. (See link)
• According to MNI’s technicals team, a stronger reversal higher is required to signal the end of the recent corrective phase. The bull trigger has been defined at 147.74, the mid-January high. A break would resume the uptrend. Moving average studies remain in a bull-mode set-up, highlighting an uptrend. For bears, a resumption of weakness would potentially open the 144.60 support.
• Cash JGBs are sharply cheaper, with the 20-40-year zone underperforming (around 6bps cheaper). The benchmark 10-year yield is 3.5bps higher at 0.841%, a fresh YTD high.
• The swaps curve has bear-steepened, with rates flat to 6bps higher. Swap spreads are mixed.