Light Calendar, Narrow Range, JGB Curve Twist Flattens

In afternoon Tokyo trading, JGB futures are holding in the middle of a narrow range, +9 compared to settlement levels.

• The local data calendar has the April preliminary leading and coincident indices released later today (0600 BST).
• With the local calendar light, local participants are likely on headlines watch and monitoring US tsys after the US cash curve twist flattened on Tuesday. The cash tsy curve has twist flattened further in Asia-Pac trade with yields +2.1bp to -0.5bp, pivoting at the 10s.
• BoJ Governor Ueda states in parliament that how the exit from easy policy could affect BoJ’s finances will depend on economic, price and financial developments – Reuters.
• The cash JGB curve has maintained the morning’s twist flattening in Tokyo afternoon trade, pivoting at the 4-year zone. Yields are however lower in line with US tsys moving away from Asia-Pac session cheaps. The benchmark 10-year yield is 0.8bp lower at 0.418%.
• Swaps curve twist flattens as well with swap spreads wider apart from the 10-year zone.
• The local calendar is heavy tomorrow with the release of GDP (Q1 final), Trade Balance (Apr), Bank Lending (May), International Investment Flows (June 2) and Tokyo Office Vacancies (May).
• The MoF plans to sell Y500bn of JGBs with 5-15.5 years until maturity in a liquidity enhancement auction tomorrow.