Yields Mostly Higher, BoJ Ueda Delivers A Familiar Message In Parliament, PPI Tomorrow

JGB futures have downticked in the Tokyo afternoon session, -4 compared to the settlement levels, after the release of the results of today’s 5-year auction. Overall, while less convincingly than this month’s 10-year auction, today's auction maintained the recent trend of improved demand metrics witnessed in JGB auctions.

• (Reuters) - Bank of Japan Governor Kazuo Ueda said on Tuesday the central bank must consider reducing the degree of monetary stimulus if trend inflation continues to accelerate. "Trend inflation has yet to reach our 2% target, which is why it is important to maintain accommodative monetary conditions for the time being," Ueda told parliament. (See link)
• The Consumer Confidence Index was unchanged at 39.5 in March. Today, the local calendar will also see Machine Tool Orders data later.
• Cash JGBs are mostly cheaper, apart from the 10-year. The 30-40-year bucket is underperforming with yields around 2-3bps higher. In contrast, the benchmark 10-year yield is 1.1bps lower at 0.791% after setting a fresh YTD high of 0.802% yesterday.
• The 5-year yield is 0.7bp higher at 0.393% after today’s supply results.
• The swaps curve has twist-steepened, pivoting at the 20s, with rates 1bp lower to 4bps higher. Swap spreads are tighter out to the 7-year and wider beyond.
• Tomorrow, the local calendar will see PPI and Bank Lending data.