US TSY FUTURES: BLOCK: March'25 10Y Buy

• USDJPY moderates back below 157.50 on the release of weaker-than-expected PPI data from the US, although the positive reaction for equities is now offsetting this reaction. Recent flurries above the 158.00 handle, into the prior intervention zone, have capped the USDJPY upside as markets continue to weigh recent BOJ rhetoric ahead of the Jan meeting.
• As a reminder, Deputy Gov. Ryozo Himino said the bank will discuss whether to raise the policy rate or not at the meeting on Jan. 23-24, based on the latest outlook for the economy and prices. Himino believes it is not normal for negative real interest rates to persist once shocks and deflationary factors are resolved. For reference, our policy team suggests that a January rate hike still looks likely, as the policy rate would still remain in accommodative territory.
• Rabobank have said that on the assumption that the BoJ hikes rates cautiously but consistently in 2025, they see scope for USDJPY to move back to 145 on a 12-month view.

• +5,000 TYH5 107-16, initial post-time offer at 0833:06ET, DV01 $325,000. The 10Y contract has since pared gains and trades 107-12 last (+4.5).

Unrounded December PPI figures look soft across the board vs expectations:

• PPI final demand 0.22% M/M (0.40% prior; 0.4% rounded expected)
• ex-food/energy 0.04% M/M (0.24% prior, 0.3% rounded expected)
• ex-food/energy/trade 0.07% M/M (0.11% prior, 0.3% rounded expected)
• No revisions to the unrounded Nov M/M figures