Sharply Richer After Tokyo CPI Data

In Tokyo morning trade, JGB futures are sharply higher, +37 compared to settlement levels, after December Tokyo CPI data.

• As previously outlined, Tokyo Jan CPI printed weaker across the board relative to expectations.It's important to note Jan 2023 marked the peak in y/y momentum for the headline CPI measures, so base effects will be less favourable going forward.
• Japan’s Dec. Services Producer Prices rise 2.4% y/y in line with November.
• RTRS - BOJ Minutes from December meeting: MEMBERS AGREED MUST PATIENTLY MAINTAIN EASY POLICY; MANY MEMBERS SAID MUST CONFIRM POSITIVE WAGE-INFLATION CYCLE IN ORDER TO CONSIDER ENDING NEGATIVE RATES, YCC; and A FEW MEMBERS SAID DECISION ON WHERTHER POSITIVE WAGE-INFLATION CYCLE IS IN PLACE MUST BE MADE COMPREHENSIVELY, NOT AT LOOKING AT PARTICULAR DATA.
• ONE MEMBER SAID TIMING TO NORMALISE MONETARY POLICY WAS NEARING.
• ONE MEMBER SAID BOJ MUST NOT MISS OPPORTUNITY TO CHANGE POLICY TO PREVENT RISING INFLATION FROM HURTING CONSUMPTION.
• BBG - A FEW MEMBERS: LIKELY TO KEEP SUBSTANTIAL EASING FOR TIME BEING; and BOJ MEMBERS: VITAL TO DEEPEN TALKS ON TIMING OF EXIT; and BOJ MEMBERS: VITAL TO DEEPEN TALKS ON RIGHT PACE OF RATE HIKES.
• Cash JGBs are richer, with the futures-linked 7-year leading (3.5bps lower).
• Swaps curve has bull flattened, with rates 1-4bps lower.