Bull-Flattening, Tokyo CPI Close To Expectations

In Tokyo morning trade, JGB futures are holding a downtick, -3 compared to settlement levels, after returning from yesterday's holiday.

• This comes after Dec Tokyo CPI figures were close to expectations. Headline CPI printed at 2.4%y/y (against a 2.5% forecast, and 2.7% prior). The ex fresh food category was 2.1% y/y in line with forecasts (2.3% prior). The ex fresh food, energy index rose 3.5% y/y, also in line with expectations (prior was 3.6%).
• Overall, the CPI data continues to show moderation in inflation pressures, albeit with core's much more gradual than the headline. Base effects will be less supportive for further headline falls as we progress through 2024.
• Elsewhere, cash US tsys are dealing ~1bp richer across benchmarks in today's Asia-Pac session. The market remains focused on US CPI/PPI inflation measures on Thursday/Friday respectively.
• The cash JGB curve bull-flattened, with yields flat to 1.3bps lower. The benchmark 10-year yield is 0.7bp lower at 0.603% versus the Nov-Dec rally low of 0.555%.
• Swap rates are slightly higher across all maturities. Swap spreads are wider.