Futures Holding An Uptick Ahead Of US CPI Data, Narrow Ranges

JGB futures are holding a small gain, +6 compared to settlement levels on Friday, after trading in a relatively narrow range in the Tokyo afternoon session. The local market was closed yesterday for the observance of the National Foundation Day holiday.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined PPI data.
• Cash US tsy yields are dealing little changed across benchmarks in today’s Asia-Pac session, with news flow light, ahead of US CPI data out later today.
• January’s US CPI report is forecast to show the first reading below 3% for annual inflation since March 2021, increasing optimism that the Federal Reserve will be able to start loosening monetary policy this year. See MNI US CPI Preview: Used Cars Drag Seen Clashing With Firmer Non-Housing Services (link)
• Cash JGBs are little changed, with yield movements from +0.8bp (2-year) to -0.3bp (20-year). The benchmark 10-year yield is 0.2bp lower at 0.724% versus the Nov-Dec rally low of 0.555%.
• Swaps are slightly richer out to the 20-year and slightly cheaper beyond. Swap spreads are mixed.