Sitting Richer At Lunch After Lower Than Expected Tokyo CPI Data

JGB futures remain sharply higher at the Tokyo lunch break, +33 compared to settlement levels, but are off the session high set during early dealings following lower-than-expected Tokyo CPI data.

• As previously outlined, January Tokyo 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 in the future.
• The other noteworthy news flow has been the release of the BoJ Minutes from the December meeting. In short, BoJ board members had a big debate on the timing of liftoff and the pace of subsequent rate hikes. That said, not everyone was convinced of the need to move at all quickly, with some members saying that it wasn’t too late to make a decision post-spring wages and others stating that it was likely that the BoJ was likely to keep substantial easing for the time being.
• Elsewhere, cash US tsys are dealing 2-3bps lower in today’s Asia-Pac session, as local participants digest yesterday’s Goldilocks Q4 GDP print. Later today the US calendar shows Personal Income & Spending, PCE Deflator for December, Pending Home Sales and Dallas Fed Manf. Activity data.
• Cash JGBs are richer, with the futures-linked 7-year leading (3.1bps lower).
• Swaps curve has bull flattened, with rates 1-2bps lower.