Tight Tokyo Trade, Insulated By BoJ Shadow

JGB futures traded either side of unchanged during the Tokyo morning, with an early uptick fading as the wider core global FI space came under pressure. Still, the JGB space received at least some insulation from the proximity of 10-Year JGB yields to the upper limit of the BoJ’s permitted trading band (hovering around 0.24%). That meant that futures recovered from worst levels of the day to last deal -5, while cash JGBs were little changed to ~1bp richer.

• In terms of domestic news flow, comments from Finance Minister Suzuki pointed to a need for vigilance when it comes to the monitoring of FX moves, which briefly weighed on the JPY crosses.
• Local PPI data for the month of March saw a slightly swifter than expected uptick in Y/Y terms, accompanied by an upside revision to the Feb print.
• A solid enough round of 5-Year JGB supply saw the low price match the wider dealer consensus (as proxied by the BBG dealer poll), while the price tail saw an incremental narrowing from already tight levels. The cover ratio ticked away from the multi-month low in the metric observed at March’s 5-Year auction, but still printed just below the 6-auction average. Nothing was observed in the way of meaningful, immediate reaction in futures & 5s post-supply.