BoJ Speculation In Full Swing, Tokyo CPI Near Enough In Line With Exp.

JGB futures shed 4 ticks overnight, with weakness in core global FI markets seeing the contract back from best levels of post-Tokyo trade.

• Local data has seen downticks in the headline and core Tokyo CPI readings in the month of February, with the prints near enough meeting expectations, while there was a slightly larger than expected uptick in the Tokyo CPI excluding fresh food and energy metric. This comes after recent rhetoric from BoJ Governor-in-waiting Ueda flagged the likelihood of a slowing inflationary impulse in the months ahead.
• Meanwhile, the latest labour market report saw a modest downtick in the unemployment rate.
• After hours on Thursday saw BBG sources note that the BoJ “is leaning toward monitoring the impact of recent tweaks to its stimulus program rather than making another adjustment at Governor Haruhiko Kuroda’s final policy meeting next week… While BOJ officials continue to see distortion in the shape of Japan’s yield curve, the central bank still needs time to look at the impact of various measures since December that adjust its control of yields.” This story put a bid into JGB futures before the wider core global FI impulse added weight (the wording of the report is generally in line with the central BoJ line).
• Subsequently, the latest BoJ survey from BBG revealed that only 3 economists expect some form of BoJ policy tweak next week, with June (41% look for a hawkish move at that point) now seen as the most probable staging post for such a move.
• Final services and composite PMI prints from Jibun Bank round off the domestic data docket ahead of the weekend.