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Tokyo CPI Misses Ahead OF BoJ Policy Decision

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Ahead of today’s BoJ Policy Decision, Tokyo CPI prints 1.8% y/y versus expectations of 2.5% and 2.6% prior. Core and Core-Core prints 1.6% y/y and 1.8% y/y respectively versus expectations of 2.2% and 2.7% and 2.4% and 2.9% prior.

  • In post-Tokyo trade, JGB futures are sharply lower, closing -37 compared to settlement levels, after 2- and 10-year US tsys finished 6-7bps cheaper as US rate cut expectations were further pared after Q1 GDP data. The OIS market now has only 34bps of easing priced by the end of 2024.
  • The US GDP report for Q1 showed weaker growth and higher inflation than expected. US tsys focused on the latter.
  • US GDP rose by an annualised 1.6%, below the 2.5% consensus, partially explained by a shortfall in private consumption (2.5% against 3.0% expected). The core PCE deflator was stronger than expected, running at an annualised 3.7% (3.4% expected).
  • Weekly claims were also lower than expected.
  • The break of the yen through 155 to the dollar is insufficient to prompt any immediate rate hike by the Bank of Japan, though it continues to monitor exchange rate depreciation for an inflationary boost which could prompt monetary tightening by as early as its June meeting, MNI understands. (See link)
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Ahead of today’s BoJ Policy Decision, Tokyo CPI prints 1.8% y/y versus expectations of 2.5% and 2.6% prior. Core and Core-Core prints 1.6% y/y and 1.8% y/y respectively versus expectations of 2.2% and 2.7% and 2.4% and 2.9% prior.

  • In post-Tokyo trade, JGB futures are sharply lower, closing -37 compared to settlement levels, after 2- and 10-year US tsys finished 6-7bps cheaper as US rate cut expectations were further pared after Q1 GDP data. The OIS market now has only 34bps of easing priced by the end of 2024.
  • The US GDP report for Q1 showed weaker growth and higher inflation than expected. US tsys focused on the latter.
  • US GDP rose by an annualised 1.6%, below the 2.5% consensus, partially explained by a shortfall in private consumption (2.5% against 3.0% expected). The core PCE deflator was stronger than expected, running at an annualised 3.7% (3.4% expected).
  • Weekly claims were also lower than expected.
  • The break of the yen through 155 to the dollar is insufficient to prompt any immediate rate hike by the Bank of Japan, though it continues to monitor exchange rate depreciation for an inflationary boost which could prompt monetary tightening by as early as its June meeting, MNI understands. (See link)