Futures Lower Overnight, US Curve Twist Flattens Ahead Of CPI Data

In post-Tokyo trade, JGB futures are weaker, closing -14 compared to settlement levels, after US tsys finished 6bp cheaper to 3bp richer across the major benchmarks. The curve twist flattened pivoting on the 10s. In a data-limited session, US tsys were mostly rangebound. There was little follow-through on moves given the proximity to today's CPI print.See the MNI CPI preview here.

• JGBs returned higher again at Wednesday's close, bouncing off the recent pullback lows. According to MNI’s technicals team, the phase of weakness that began Monday has since reversed; steering markets clear of a test of key support at the 146.11 low on the continuation contract - last printed back in February. The previous buy-on-dips theme appears to have returned, but any return higher will initially target the May 12 high of 149.21. Clearance of these levels would highlight an important break.
• China has indicated a positive stance around a possible summit between Premier Li Qiang and Japan PM Kishida in September. China tour groups may also return to Japan from this Thursday onwards.
• On the data front today we have weekly investment flows, along with the July PPI. The market looks for a 0.2% m/m rise (prior -0.2%). The y/y is projected at +3.5% (prior +4.1%).