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BoJ Set To Look Through Cost-Push Driven CPI, 20-Year Supply Due

JGBS

JGB futures added 8 ticks in overnight trade, benefitting from the post-Tokyo bid in core global FI markets, although a pullback from best levels in U.S. Tsys facilitated a similar move in the contract.

  • Note that Japan Exchange data revealed that foreigners broke a 4-week streak of net sales of JGB futures in the week ending 13 May, registering only the second week of net purchases observed in the last 9 weeks of available data.
  • Today’s Japanese core CPI print is expected to hit the BoJ’s +2.0% goal in Y/Y terms (per the BBG median estimate), with dataset shifts surrounding the previous enactment of cheaper mobile phone charges noted as a major driver. Meanwhile, the impact of higher food prices and energy costs will filter into the headline reading, which is expected to hit +2.5% in Y/Y terms (per the BBG median). Note that the BoJ has already flagged that it expects such a move to take place, while pushing back against the idea of policy tweaks based on this inflation trajectory owing to the cost-push nature of the move.
  • Elsewhere, we will get 20-Year JGB supply.
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JGB futures added 8 ticks in overnight trade, benefitting from the post-Tokyo bid in core global FI markets, although a pullback from best levels in U.S. Tsys facilitated a similar move in the contract.

  • Note that Japan Exchange data revealed that foreigners broke a 4-week streak of net sales of JGB futures in the week ending 13 May, registering only the second week of net purchases observed in the last 9 weeks of available data.
  • Today’s Japanese core CPI print is expected to hit the BoJ’s +2.0% goal in Y/Y terms (per the BBG median estimate), with dataset shifts surrounding the previous enactment of cheaper mobile phone charges noted as a major driver. Meanwhile, the impact of higher food prices and energy costs will filter into the headline reading, which is expected to hit +2.5% in Y/Y terms (per the BBG median). Note that the BoJ has already flagged that it expects such a move to take place, while pushing back against the idea of policy tweaks based on this inflation trajectory owing to the cost-push nature of the move.
  • Elsewhere, we will get 20-Year JGB supply.