JGBS: Futures Stronger Overnight, US Tsys Buoyed By PPI Details

In post-Tokyo trade, JGB futures closed stronger, +26 compared to settlement levels, after US tsys rallied strongly on Thursday after details of January's PPI offered some hope for easing price pressures in the Federal Reserve's preferred inflation measure, the PCE Deflator.

• Overall PPI final demand inflation printed at 0.40% M/M sa (cons 0.3) after a heavy upward revision of 0.50% (initial 0.22) in Dec. However, that was partly offset by a downward revised 0.23% (initial 0.38) in Nov.
• US tsys finished near late-session bests on Thursday, 5-10bps richer with a flattening bias, returning to pre-CPI levels from Wednesday.
• Market sentiment was further supported by the postponement of reciprocal US tariffs to early April. The tariff rates would be determined country-by-country, in what would appear to be a complex process.
• (MNI)  “A rate hike in April when the first survey results of shunto wage negotiations are available cannot be ruled out. If capital investment remains solid and private consumption does not weaken, the bank is likely to raise the rate in April,” Makoto Sakurai, a former BoJ board member who left in 2021, told MNI.
• Today, the local calendar will see Weekly International Investment Flow data alongside 5-year supply. Q4 GDP (P) is due on Monday.