JGBS: Futures Off Overnight Lows, PPI In Line, BoJ Ueda Remarks On Debt Levels

In Tokyo morning trade, JGB futures are weaker but off overnight lows, -23 compared to settlement levels.

• Japan's PPI for Feb was close to expectations. The m/m outcome was flat, versus a -0.1% forecast. The Jan read was +0.3%. In y/y terms, we printed at 4.0%, in line with forecasts, but just below the Jan 4.2% print. The slight downtick in PPI momentum does not suggest much headline CPI relief, although as we note below import price momentum has also cooled.
• “BoJ Governor Ueda is not concerned about the country's government bond yields reaching their highest level since 2008, attributing the rise to market views on the economy and inflation. Ueda signalled that the BoJ is not planning to intervene in the bond market, even after benchmark yields breached 1.5%, and reiterated that the market should determine yield levels.” (per BBG)
• Cash US bonds are slightly richer in today’s Asia-Pac session after yesterday’s heavy NY session.
• Cash JGBs are 1-3bps cheaper across benchmarks, with a steepening bias. The benchmark 20-year yield is 1.2bps higher at 2.292% ahead of today’s supply.
• Swap rates are 1-2bps lower, with swap spreads tighter.