Futures Sharply Richer, US Monthly PCE Deflator Due Later Today

JGB futures remain sharply higher in Tokyo afternoon session, +37 compared to settlement levels, but are off the session high set during early dealings following the release of lower-than-expected Tokyo CPI. As previously outlined, Tokyo CPI printed weaker across the board relative to expectations in January.

• The other noteworthy news flow was the release of the BoJ Minutes from the December meeting. In short, BoJ board members had a big debate on the timing of liftoff and the pace of subsequent rate hikes. That said, not everyone was convinced of the need to move at all quickly, with some members saying that it was likely that the BoJ was likely to keep substantial easing for the time being.
• Coincident & Leading Indices data is due later today.
• (Bloomberg Economics) The surprisingly sharp slowdown in Tokyo’s inflation in January will give the Bank of Japan pause. (See link)
• Elsewhere, cash US tsys are dealing 1-2bps richer in today’s Asia-Pac session, as local participants digest yesterday’s Goldilocks Q4 GDP print. Later today sees the PCE Deflator for December.
• Cash JGBs are richer, with the futures-linked 7-year leading (3.6bps lower).
• Swaps curve has bull flattened, with rates 1-3bps lower.
• The local calendar is empty on Monday apart from BoJ Rinban Operations covering 3-10-year and 25-year+ JGBS.