Futures Sharply Higher Despite Only Small Gains For US Tsys

In post-Tokyo trade, JGB futures are sharply richer, closing +35 compared to settlement levels, despite US tsys showing only small net movements following an in-line US CPI print. The US 2-year finished 2bps cheaper at 4.73%, while the 10-year was 3 bps lower at 4.20%.

• US CPI inflation ticked higher in November, with the headline rising 0.1% m/m and the core rising 0.3% m/m. Annual headline inflation ticked down to 3.1% and core annual inflation was steady at 4.0%.
• Focus now turns to today's PPI data, ahead of the FOMC rate decision at 1300ET and Fed Chair Powell's presser at 1430ET. The Fed will likely lower its median "dot plot" estimate for policy interest rates at the end of 2024 to around 4.9%, former officials and staffers told MNI, as expectations build for the first rate cut to come as early as the year's first half.
• Today sees the Japan Tankan survey outcome for Q4. The market looks for close to steady sentiment in the manufacturing and non-manufacturing sectors (large manufacturing companies at +10 versus +9 in Q3).
• Today also sees BOJ Rinban operations covering 1-3-year, 5-10-year, and 25-year+ JGBs.