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Futures Pare Overnight Weakness Following National CPI

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In Tokyo morning trade, JGB futures have pared overnight losses following today’s National CPI release to be -5 compared to settlement levels.

  • National CPI for April was fairly close to expectations. The headline printed at 2.5%y/y, versus 2.4% forecast and 2.7% prior. The ex fresh food measure was 2.2%y/y in line with estimates and versus 2.6% prior. The ex fresh food and energy measure was 2.4% y/y, also in line with expectations and against a 2.9% read in March. These measures are trending back towards earlier 2024 lows.
  • Our policy team noted: "Services CPI, a key BOJ focus, were 1.7% y/y in April, slowing from 2.1% in March and indicating that the rise in services prices is weaker than the Bank expected and the corporate price revisions in April were limited. " (see this link).
  • The focus going forward may be on whether the education and medical sub-categories reverse April weakness, which weighed on aggregate services inflation. Note next week we get Tokyo CPI for May.
  • Cash JGBs are little changed. The benchmark 10-year yield is 0.1bp lower at 1.001% versus the YTD high of 1.011%.
  • The swaps curve has slightly bull-flattened, with rates flat to 1bp lower. Swap spreads are mostly tighter.
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In Tokyo morning trade, JGB futures have pared overnight losses following today’s National CPI release to be -5 compared to settlement levels.

  • National CPI for April was fairly close to expectations. The headline printed at 2.5%y/y, versus 2.4% forecast and 2.7% prior. The ex fresh food measure was 2.2%y/y in line with estimates and versus 2.6% prior. The ex fresh food and energy measure was 2.4% y/y, also in line with expectations and against a 2.9% read in March. These measures are trending back towards earlier 2024 lows.
  • Our policy team noted: "Services CPI, a key BOJ focus, were 1.7% y/y in April, slowing from 2.1% in March and indicating that the rise in services prices is weaker than the Bank expected and the corporate price revisions in April were limited. " (see this link).
  • The focus going forward may be on whether the education and medical sub-categories reverse April weakness, which weighed on aggregate services inflation. Note next week we get Tokyo CPI for May.
  • Cash JGBs are little changed. The benchmark 10-year yield is 0.1bp lower at 1.001% versus the YTD high of 1.011%.
  • The swaps curve has slightly bull-flattened, with rates flat to 1bp lower. Swap spreads are mostly tighter.