Richer, Mid-Range, Light Local Calendar, Awaits US Non-Farm Payrolls

JGB futures are sitting in the middle of the Tokyo session range at 148.83, +9 versus settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined comments by BoJ Governor Ueda in parliament re: not being able to say when the BOJ will achieve its 2% price goal.
• Consequently, local participants were likely closely monitoring headlines and keeping an eye on US Treasury yields leading up to the release of the US Non-Farm Payrolls data later today.
• In line with this, cash tsys are trading 0.6-2.0bp cheaper in Asia-Pac trade after the US Senate passed the US debt-ceiling bill, by 63-36 votes. The legislation now goes to US President Biden to be signed into law, which the White House has stated will happen as soon as possible.
• The cash JGBs are richer across the curve, apart from the 40-year zone, which is 0.5bp cheaper. The benchmark 10-year sees its yield 0.7bp lower at 0.417%, below the BoJ's YCC limit of 0.50%. The 2-3-year zone is the outperformer with yields 1.0-1.3bp lower despite this morning’s BoJ operations seeing a higher spread and a slightly higher offer cover ratio for the 1-3-year bucket.
• Swap rates are however lower across the curve with swap spreads narrower.
• The local calendar sees Jibun Bank PMIs (May F) on Monday.