Futures Sharply Lower Overnight As US CPI Surprises On The Upside

In post-Tokyo trade, JGB futures are sharply weaker, closing -37 compared to settlement levels, after US tsy yields shunted higher following hotter than expected CPI inflation data: m/m (0.4% vs. 0.3% est), y/y (3.5% vs. 3.4% est); CPI Ex Food and Energy m/m (0.4% vs. 0.3% est), y/y (3.8% vs. 3.7% est).

• US tsys were pressured further by a poorly received 10-year auction re-open tailed 3.3bp (largest since Dec'22: 4.560% high yield vs. 4.527% WI; bid-to-cover falls to 2.34x vs. 2.51x prior).
• There was little reaction to the March FOMC minutes where the majority favoured cutting QT pace by half "soon". They also reflected concerns that inflation’s progress toward its 2 per cent target might have stalled, and restrictive monetary policy may need to be maintained for longer than anticipated.
• US tsys bear-flattened, with the 2-year yield finishing 23bps higher at 4.97%. The US 10-year yield increased 18bps to 4.54%, a fresh YTD high, and more than 70bps above January levels.
• (Bloomberg) -- BoJ will forecast an increase of about 2% in the core consumer price index for fiscal 2026 in its outlook report slated to be published on April 26, Jiji reports without attribution. (See link ICYMI)
• Today, the local calendar will see International Investment Flow, Money Stock and Tokyo Avg Office Vacancies data alongside 20-year supply.