Overnight Gains In Futures Unwound

JGB futures have eaten away at overnight gains, last trading -1, with Tokyo participants seemingly continuing to focus on global inflationary impulses (this time via the oil price channel, in lieu of weekend news flow), fading the overnight bid that was linked to softer than expected U.S. manufacturing survey data.

• The presence of this afternoon’s 10-Year JGB supply may also be factoring into the move, while wider cash JGBs have edged away from early session richest levels. The swap curve has twist steepened, which may mean that payside flows in the super-long end of the swap curve are aiding the pull away from early session bests in JGBs.
• Local headline flow has seen Finance Minister Suzuki point to a need for a permanent source of revenue for the government’s child-related spending policies, with an unveiling of the framework surrounding the matter scheduled for June. Suzuki was explicitly cautious re: additional bond issuance to finance the policy steps, but this has done little to support the space.