Richer, US Tsys Yields Lower, Rinban Operation Covering 1-5-year and 10-25-year JGBs

In post-Tokyo trade, JGB futures are stronger, closing +17 compared to settlement levels, after cash US tsys richened 5-7bp across the benchmarks in NY trading ahead of US Non-Farm Payrolls late today. US tsys finished near their NY session bests after a volatile first half. Stronger-than-expected ADP private employment data saw yields move higher before lower-than-expected unit labour costs (4.2% vs. 6.2%) delivered a quick reversal.

• Fed speak proved mixed ahead Blackout at midnight Friday. Non-voter StL Fed Pres Bullard commented on the need for further hikes, while Philly Fed Harker reiterated his dovish comments from Wednesday. FOMC rate hike expectations cooled with about 6bp priced in for June and 16bp by July.
• The functioning of Japan’s bond markets improved amid receding speculation about early tweak of yield-curve control by the BoJ. The BOJ’s diffusion index, which is based on a survey of 70 respondents on bid-ask spreads and trading volumes, rose to minus 46% points, compared with minus 64% points three months ago, which was the worst on the bank’s data going back in February 2015. (link , ICYMI)
• The local calendar tomorrow is light today with Monetary Base for May as the only release.
• BoJ Governor Ueda is scheduled to appear in parliament from 0133 BST / 0933 JST.
• Today will also see BoJ Rinban operations covering 1-5-year and 10-25-year JGBs.