Futures Swing Into Positive Territory, Markets Await US CPI Data

In Tokyo morning trade, JGB futures have swung into positive territory, +3 compared to settlement levels, after overnight weakness.

• JGB futures traded higher to finish last week and have added to those gains during Wednesday's trade. According to MNI’s technicals team, the recent recovery rally and the strength into year-end ‘23 topped initial resistance at 146.52, the Dec 7 high, to mark a bullish development. This opens resistance at 147.27 further out, the Dec 06 high and 148.74, the Jul 24 high. 143.44, the Oct 31 low, marks key support and a medium-term bear trigger. Initial support to watch is at 144.60, the Dec 11 / 8 low.
• Cash US tsys are dealing ~1bp richer in today’s Asia-Pac session ahead of US CPI/PPI later today and Friday. Consensus puts core CPI inflation at 0.3% M/M in December, with risk seen to the downside. If analysts are correct, supercore trend rates are likely to remain very strong at 4% annualised handles but treat with some caution as differences in methodology have seen core PCE at notably weaker rates in recent months. (see MNI’s US CPI Preview here)
• Cash JGBs are slightly mixed. The benchmark 10-year yield is 0.6bp higher at 0.592% after yesterday’s poor supply result.
• Swaps are also mixed, with swap spreads generally wider.
• Today, the local calendar is relatively light, with Tokyo Avg Office Vacancies and Leading & Coincident Indices as the highlights.