Futures A Touch Softer Overnight, Tokyo CPI Eyed

JGB futures shed 7 ticks in overnight trade, going out a little off of worst levels, with the modest steepening impetus observed on the U.S. Tsy curve during Thursday trade applying some light pressure.

• Futures came under some very modest pressure during the early rounds of the overnight session as BoJ Governor Kuroda noted that the BoJ’s exit from ultra-easy policy settings will not be easy and can be managed. This came as a response to a question based on a hypothetical scenario. Kuroda also stressed that the Bank needs to maintain its ultra-loose policy settings, while noting that further U.S. rate hikes won’t necessarily result in a weaker JPY.
• Note that foreigners were net buyers of JGB futures in w/e 20 May, per Japan Exchange data, lodging the second round of weekly net purchases in a row (the same dynamic has been observed in wider Japanese bonds via the Japanese weekly international security flow data, as we covered yesterday).
• On the fiscal front, JiJi has reported that Japan is mulling the issuance of bridge bonds to fund defence spending.
• Tokyo CPI data headlines the domestic docket on Friday. The ex-fresh food measure is expected to accelerate to +2.0% Y/Y in May, marginally above the +1.9% reading seen in April. Elsewhere, BoJ Governor Kuroda will appear in front of parliament this morning.