Futures Richer, Twist-Flattening Of the Curve, Awaiting US CPI Data

JGB futures are richer at 145.51, +27 compared to the settlement levels, slightly below the high of 145.58 set in the Tokyo morning session.

• In addition to the previously outlined domestic data drop, which included PPI data, local participants have had to digest a speech from BOJ Board Member Noguchi. Noguchi stated that “the biggest focus is whether wage hike momentum will be maintained or not.” He added that “Japan needs to shake off the 'zero norm' of prices and wages in order for a nominal wage increase to exceed 2% as a trend” and “3% nominal wage growth would correspond with a 2％ inflation target”.
• Local participants have also likely been on US tsys watch ahead of US CPI data later today. Cash US tsys sit ~1bp cheaper across the major benchmarks.
• The cash JGB curve has bull-flattened beyond the 1-year (+1.0bp), with yields 0.5bp to 5.1bps lower. The benchmark 10-year yield is 1.4bps lower at 0.755% versus the cycle high of 0.814% set late last week.
• The swaps curve has twist-flattened, pivoting at the 3s, with rates 0.1bp higher to 1.8bps lower. Swap spreads are generally wider across maturities.
• Tomorrow, the local calendar sees Weekly International Investment and M2 & M3 Money Flows.