Futures Soften A Touch Overnight, CPI Largely In Line With Expectations

The pressure observed in core global FI markets applied some modest weight to JGB futures in the final overnight session, closing -12, a little off worst levels, with hawkish ECB speak in the driving seat during post-Tokyo trade.

• National CPI for Dec has already crossed this morning, with the upticks generally matching wider expectations, printing +4.0% Y/Y in headline CPI terms, while the core print was +4.0% Y/Y and the core-core metric sat at +3.0%.
• This shouldn’t be a gamechanger for the BoJ when it comes to Governor Kuroda’s final monetary policy meeting (in March), as he looks to promote meaningful wage growth and save face by maintaining existing monetary policy settings through the end of his term. Expect a more meaningful internal debate on BoJ policy to become apparent under Kuroda’s successor.
• Looking ahead, continued post-BoJ shakeout will likely dominate Friday’s market swings.
• The latest round of BoJ Rinban operations, covering 1- to 10- & 25+-Year JGBs, headlines the remainder of the local docket.