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Futures Lower With US Tsys, BoJ Rinban Operations Will Be Watched With 10YY At 1%

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In post-Tokyo trade, JGB futures are weaker, closing -11 compared to settlement levels, after a sell-off in Gilts led to cheaper US tsys.

  • UK inflation declined less than expected in April despite falling energy prices. Headline CPI fell to a 2.3% annual rate. Although this was the lowest rate since mid-2021, and closer to the BOE’s 2% inflation target, it was above consensus estimates for 2.1% increase.
  • There was no major reaction to the May 1 FOMC minutes. The minutes revealed that many policymakers are uncertain about the extent to which monetary policy is restraining the economy. Moreover, there was agreement that higher inflation prints in Q1, and signs of strong economic momentum, mean it would take longer than originally anticipated to gain confidence that inflation was returning sustainably to target.
  • Today, the local calendar sees Weekly International Investment Flow, Jibun Bank PMIs and Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year JGBs.
  • Investors will pay close attention to the BoJ's regular bond-purchase operations after the benchmark 10-year yield reached a key level of 1% for the first time since the bank ramped up unprecedented stimulus measures in 2013.
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In post-Tokyo trade, JGB futures are weaker, closing -11 compared to settlement levels, after a sell-off in Gilts led to cheaper US tsys.

  • UK inflation declined less than expected in April despite falling energy prices. Headline CPI fell to a 2.3% annual rate. Although this was the lowest rate since mid-2021, and closer to the BOE’s 2% inflation target, it was above consensus estimates for 2.1% increase.
  • There was no major reaction to the May 1 FOMC minutes. The minutes revealed that many policymakers are uncertain about the extent to which monetary policy is restraining the economy. Moreover, there was agreement that higher inflation prints in Q1, and signs of strong economic momentum, mean it would take longer than originally anticipated to gain confidence that inflation was returning sustainably to target.
  • Today, the local calendar sees Weekly International Investment Flow, Jibun Bank PMIs and Machine Tool Orders data alongside BoJ Rinban Operations covering 1-10-year JGBs.
  • Investors will pay close attention to the BoJ's regular bond-purchase operations after the benchmark 10-year yield reached a key level of 1% for the first time since the bank ramped up unprecedented stimulus measures in 2013.