Hotter Super-Core Inflation

JGB futures followed the general gyrations in U.S. Tsys during post-Tokyo trade, with the late pullback from best levels leaving the contract +3 at the close of the overnight session.

• National CPI data for February crossed recently, with the headline and excluding fresh food measures seeing Y/Y moderations that were in line with expectations, owing to government subsidies surrounding energy, while the excluding fresh food and energy metric saw a larger than expected uptick, topping expectations by 0.1ppt to print a fresh cycle high at +3.5% Y/Y (incoming BoJ Governor Ueda had previously pointed to peak inflation being in the rear view). The latter development may apply some light pressure to JGB futures, although there could be some counter given that U.S. TY futures have bounced from their early Asia-Pac lows.
• The latest monthly RTRS poll of Japanese corporations revealed that “Japanese firms see inflation and the chance of worldwide recession as the primary risks they face in fiscal 2023. Of nearly 500 major companies polled, 82% said a continuation of global inflation was a concern for their business in the coming period. In the second most common response, 59% named the risk of a global recession.”
• Looking ahead, flash PMI data presents the highlight of the local docket during the remainder of the session.