Richer Across Benchmarks, Ranges Narrow, PPI & BoJ Rinban Operations Tomorrow

JGB futures are holding in positive territory, +10 compared to settlement levels.

• Outside of the previously outlined M2 & M3 Money Stock, there hasn't been much in the way of domestic drivers to flag. May Machine Tool Orders are due soon along with a Liquidity Enhancement Auction covering OTR 5-15.5-year JGBs.
• Reuters poll: 63% of economists predict the BoJ will decide to start reducing the size of bond buying at the June meeting (up from 41% in the May poll). Also, 92% of economists expect the BoJ to hike the interest rate to at least 0.20% by the end of 2024 (up from 88% in May).
• Cash US tsys are 1-2bps richer in today’s Asia-Pac session.
• Investors now keenly await two key events on Wednesday: the latest US CPI data and the latest thoughts from Federal Reserve Chairman Jerome Powell following the FOMC Decision.
• Cash JGBs are richer across benchmarks, with yields flat to 2bps richer. The benchmark 10-year yield is 1.9bps lower at 1.025% versus the cycle high of 1.101%.
• The swaps curve has bull-flattened, with rates flat to 1.3bps lower. Swap spreads are mixed.
• Tomorrow, the local calendar will see PPI data alongside BoJ Rinban Operations covering 1-10-year and 25-year+ JGBs.