JGBS: Futures Lower, Downtrend Intact, Amid Multiple Weights

JGB futures track at 128.51, -.34 versus settlement levels in latest dealings. Negative spill over from a softer US TSY futures backdrop, coupled with higher oil prices (as Iran and Israel trade tit for tat strikes), are weighing. On the data front we also had Q1 GDP revisions, which weren't as bad as feared. This may marginally add to the near term BoJ outlook. Growth was unchanged at +0.5%q/q (the market had been expected a downward revision to 0.3%), with business spending revised to a -0.7% dip (versus -0.9% forecast and 0.3% originally reported).   

• For futures, May lows sub 128.00 are still intact but broader downtrend conditions in futures persist. Recent highs were around the 50-day EMA resistance point, which comes in at 129.49. We would likely need a sustained move above this level to challenge the bearish technical backdrop.
• In the cash JGB space we are around 2 to 5bps firmer in yield terms, led by the 7 and 10yr tenors. The 10yr is around 2.725%, with May highs just above 2.80% eyed on a further extension higher.
• The 2/10s curve is back to +130bps, also close to May highs, while the 2/30s curve is is less threatening in terms of these recent highs (last +252bps, May highs were above +270bps).
• On the data front, we have more second tier outcomes this week, but there will be some focus on May PPI, out Wednesday.