Futures Stronger With US Tsys After US CPI Miss, JPY Intervention

In post-Tokyo trade, JGB futures are sharply stronger, closing +20 compared to settlement levels, after US tsys responded favourably to benign US CPI data. US tsys gapped richer on weaker-than-expected US CPI, curves bull steepened as rate cut pricing into year-end gained momentum.

• US CPI inflation for June undershot market expectations, with the headline CPI declining 0.1% m/m, taking the annual change down to +3.0% y/y and the core measure rising just 0.1% m/m, taking the annual increase down to 3.3% y/y, its lowest rate in more than three years.
• Supercore (services ex-housing) inflation printed negative again, at -0.05% (-0.04% prior), vs +0.27% expected, for the first back-to-back deflations since Aug-Sep 2021. Overall core services printed just +0.13%, vs +0.32% MNI avg (and 0.22% May), the lowest since August 2021.
• The 2-year finished 11bps lower at 4.51%, while the 10-year finished 7bps richer at 4.21% as the 4.19% resistance level stymied further gains.
• Fed's Goolsbee expressed confidence that the US economy is on track to achieve 2% inflation, where he described the recent data as "excellent", as per BBG.
• The Japanese government and the BoJ conducted currency intervention on Thurs. to prop up the yen, the Mainichi newspaper reports, citing an unidentified government official. (per BBG)
• Today, the local calendar will see Industrial Production and Capacity Utilisation data.