Outperform Tsy Futures Post PPI Miss & Ex BoJ Deputy Governor Comments

JGB futures are sitting towards the upper end of their range for the session so far. We are at 148.17 currently (+0.16), after a 148.00/26 range. This has outperformed the slightly softer US Tsys backdrop evident in the session to date (TYU3 -01 at 113-11).

• Japanese domestic news has likely aided this outperformance at the margins. PPI printed weaker than expected early doors (see this link), while ex-Deputy Governor Wakatabe stated he sees no change from the BoJ this Friday, nor at the July meeting (an upward revision to the inflation view is expected at the July meeting though).
• These latter comments are in line with Bloomberg's BoJ report from late on Friday, which suggested little need for YCC tweaks in the near term.
• In the cash JGB space we have seen a slight downtick in yields but very little follow, with a firmer US cash Tsy yield backdrop likely providing some offset. The 10yr yield was last close to 0.425%. In the swap space it been a similar story, the 10yr last just under 0.59%.
• Still to come is preliminary May machine tool orders. There is no market consensus, but the prior read was -14.4% y/y.