Futures Uptick Following US Tsys’ Post-CPI Rally

JGB futures uptick in post-Tokyo trade, closing +10 compared to settlement levels, with US tsy yields lower after US CPI data details point to some inflation cooling.

• US inflation for April met expectations, with both headline and core ex-food & energy measures +0.4% m/m. However, rent and services prices excluding housing and energy showed an improvement, while the increase in goods prices was mainly driven by used cars and is not expected to continue.
• According to MNI's technical analyst, JGB futures continued appreciation has confirmed an extension of the current short-term bull cycle. The strong recovery from 147.27, the April 18 low, confirms the corrective nature of the pullback between March 22 and April 18. Attention remains on 149.53, the March 22 high and the bull trigger.
• Nikkei reported that two Japanese Life Insurers are planning to cut their US Treasury Holdings in favour of JGBs in fiscal 2023(link).
• A gauge of bond market liquidity stress by Bloomberg has shrunk to the lowest level since August as the BoJ cut its debt purchases, suggesting bond market pressure on the BoJ has eased (Link).
• The local calendar is scheduled to release Trade Balance (Mar), Banking Lending (Apr) and Weekly International Security Flow (May 5) data, along with the BoJ Summary of Opinions (April) and 30-year JGB supply.