Futures Cheaper With US Tsys After US CPI Came In Hotter Than Expected

In post-Tokyo trade, JGB futures are cheaper, closing -7 compared to settlement levels, after US tsys US tsys yields finished 5-6bps higher following modestly higher than expected US CPI data for February. More supply, with poor reception to the US 10-year reopening, and risk-on sentiment also weighed on US tsys.

• CPI m/m (0.4% vs. 0.4% est), y/y (3.2% vs. 3.1% est); CPI Ex Food and Energy m/m (0.4% vs. 0.3% est) y/y (3.8% vs. 3.7% est). Meanwhile, Real Avg Hourly Earning y/y (1.1% vs. prior 1.3% (rev)).
• The probability of a May rate cut by the FOMC, which had already fallen below 20%, edged towards 15%.
• (Bloomberg) Negative real yields on JGBs will stay in place well beyond any tightening of monetary policy by the Bank of Japan. Even if the central bank surprises with an exit from sub-zero rates and removal of YCC at next week’s meeting, 10-year yields won’t come close to matching Japan’s headline inflation around 2%. (See link)
• Today, the local calendar is empty.