CPI Nudges Higher, Futures Tick Lower Overnight

JGB futures were ultimately biased lower overnight, shedding 13 ticks as U.S. Tsys, and indeed the major core FI markets, traded on the backfoot.

• That overarching trajectory of travel, coupled with the fact that the 3 major Japanese Y/Y CPI readings moved higher again, generally matching wider expectations (with a modest 0.1ppt miss for the headline Y/Y release), may turn focus towards the need for another round of BoJ defence re: its YCC settings, although yesterday’s rally gives the BoJ some breathing room on that front.
• Note that Japan’s former Vice Finance Minister, Eisuke Sakakibara (“Mr Yen”) has suggested that the BoJ may surprise markets with another tightening move as soon as next month. He told BBG that there is the potential for a tweak to the YCC band after Kuroda surprisingly expedited the normalisation process earlier this week.
• The remainder of Friday’s local docket is headlined by the outdated minutes from the BoJ’s Oct meeting.