JGB Futures Off Highs

Early momentum in JGB futures has been positive. We touched fresh multi week highs at 148.26, but we now sit slightly lower, last at 148.18 (+0.17). A strong open coincided with weaker than expected PPI data and ex BoJ Deputy Governor Wakatabe stating that a move in June is unlikely from the BoJ, and that is he unsure if a policy change will happen in July (an upward revision to the inflation forecast is expected though).

• This echoes Bloomberg reports from late on Friday, with BoJ officials reportedly seeing little need to tweak YCC for now.
• Some offset has likely come from a firmer US yield backdrop since the open, led by the 2yr (4.605% +1.2bps), yields are firmer, although 20-30yr yields are down a touch.
• Cash JGBs have had a muted start, albeit with yields ticking slightly lower, before edging back higher. The 10yr benchmark last around 0.42%.
• Swap rates are seeing slight downside pressure, although more so at the back end, the 10yr down by close to 1bp to 0.5875%. Like cash JGBs, yields are away from lows.