Futures Cheaper With US Tsys In Overnight Dealings, Core CPI Measures Beat

In post-Tokyo trade, JGB futures are weaker, closing -9 compared to settlement levels, after a twist-steepening of the US tsy curve during yesterday’s NY session.

• The front-end US tsys were strongly bid after sanguine opening remarks from Fed Chair Powell in a speech to the Economic Club of New York. He noted that "Incoming data over recent months show ongoing progress toward both of our dual mandate goals—maximum employment and stable prices" and the significant tightening in financial conditions (which at the margin could mean less need to hike).
• The long end did, however, see significant cheapening impetus after Powell noted in the Q&A session that he didn’t know where policy would settle, that it does not feel too tight and that it’s possible the US is heading back towards a more inflationary environment.
• US tsys finished the NY session with yields 6ps lower to 12bps higher. The US 10-year yield traded at a fresh 16-year high of 4.99%.
• Headline National CPI printed in line with expectations at 3.0% y/y in September versus 3.2% in August. Core and Core-Core measures printed respectively higher-than-expected at 2.8% y/y and 4.2% y/y versus estimates of 2.7% and 4.1%. The prior readings were 3.1% and 4.3% respectively. These results are little to apply some pressure in the early rounds of today’s Tokyo session.