Futures Swing Into Positive Territory At Lunch

At the Tokyo lunch break, JGB futures are in positive territory, +5 compared to settlement levels, after spending most of the morning session with a downtick.

• This comes after Dec Tokyo CPI figures printed close to expectations. Headline CPI printed at 2.4%y/y (against a 2.5% forecast, and 2.7% prior). The ex fresh food category was 2.1% y/y in line with forecasts (2.3% prior). The ex fresh food, energy index rose 3.5% y/y, also in line with expectations (prior was 3.6%).
• Overall, the CPI data continued to show moderation in inflation pressures, albeit with core's much more gradual than the headline. Base effects will be less supportive for further headline falls as we progress through 2024.
• The BoJ announced buying of 10-year to 25-year debt that suggested it will purchase less of those bonds in all of January, in line with what it signalled late last year. (See Bloomberg link)
• Elsewhere, cash US tsys are dealing 1-2bps richer across benchmarks in today's Asia-Pac session. The market remains focused on US CPI/PPI inflation measures on Thursday/Friday respectively.
• The cash JGB curve bull-flattened beyond the 1-year, with yields 0.9bp to 1.7bps lower. The benchmark 10-year yield is 0.9bp lower at 0.601% versus the Nov-Dec rally low of 0.555%.
• Swap rates are slightly lower across all maturities. Swap spreads are wider.