Tokyo CPI Measures Prints Largely In Line

In post-Tokyo trade on Friday, JGB futures were weaker, closing -6 compared to settlement levels. Note that Japanese markets return today from yesterday's holiday.

• Tokyo CPI printed 2.4% y/y versus market expectations of 2.5% and 2.7% prior. The ex-fresh food and ex-fresh food and energy measures printed in line with expectations at 2.1%y/y and 3.5% y/y. Meanwhile, Household Spending printed -2.9% y/y versus expectations of -2.3%. Overall, the data should be mildly supportive for the market.
• Overnight, US tsys finished 1-2bps richer after starting the day with moderate losses in spillover from Europe. A decline in the NY Fed's inflation expectations index however helped the bonds recover. Comments from Fed voter Bostic, who expects two 25bp cuts this year, beginning in Q3, were also supportive.
• After the NY close, Fed Bowman said inflation could continue to decline and flagged the potential to begin cutting interest rates at some point to prevent overly tight policy. She did however caution against expectations for cuts in the near term. TYH4 is trading at 111-27+, -0-06+ from NY closing levels, so far in today's Asia-Pac session.
• The market remains focused on US CPI/PPI inflation measures on Thursday/Friday respectively.