Futures Weaker Overnight With US Tsys, National CPI Prints Largely In Line

In post-Tokyo trade, JGB futures are weaker, closing -17 compared to settlement levels, after US tsys finished 7-11bps cheaper across the major benchmarks, with the belly leading. Earlier in the European session, a flow-driven cheapening in EGBs spilled over into the wider space weighing on tsys. Tsys extended losses as the latest US initial jobless claims were less than forecast.

• FOMC dated OIS remain stable, a 25bp hike is seen at next week's meeting with a terminal rate of 5.40% in November. There are ~65bps of cuts seen by June 2024.
• June National CPI prints 3.3% y/y on the headline versus expectations of a steady 3.2%, while ex-fresh food prints in line with expectations at 3.3% y/y (from 3.2% prior). The ex-fresh food, energy measure also prints in line with the market estimate of 4.2% y/y and 4.3% prior. The reaction should be muted.
• Expectations for next Friday's BoJ meeting are fairly low in terms of any potential policy tweaks. An ex-Japan Finance Ministry official stated it would be a major surprise if Ueda moved next week given his recent rhetoric (See link).
• Today the MoF will conduct a Y500bn Liquidity Enhancement Auction for OTR 5-15.5-year JGBs.