BoJ Impulse Outweighs Softer NRW CPI

Bund futures have more than unwound their NRW CPI-inspired uptick, leaving the contract -100 or so after the BoJ’s softening of it’s YCC defence (hard stop on 10-Year JGB yields at 1.0%, with greater flexibility beyond 0.5% permitted) dominated in Asia-Pac hours. That allowed the contract to extend on its late Thursday weakness, more than unwinding the ECB-derived bid in the process. The BoJ-regional CPI combination has facilitated a ~100-tick range, which is much wider than the norm at this time of day, with fresh lows printed at typing.

• Late Thursday saw BBG sources note that “European Central Bank officials appeared to view risks to the euro area’s inflation outlook as balanced. That impression underpinned their decision to base any future interest-rate decisions on incoming data.”
• That came after RTRS sources suggested that “European Central Bank policymakers debated raising banks' mandatory reserves to 2% from 1% of their deposits… The proposal wasn't supported by the majority of policymakers at the gathering but it might come back when the ECB reviews its overall framework for steering interest rates later this year.”
• Regional and national CPI readings out of Germany, as well as preliminary French & Spanish CPI prints, present the European highlights today, with Eurozone economic sentiment readings also due. The BoJ press conference & U.S. data will also be worth watching.