BOJ: Rinban Purchase Offer

ACGBs (YM -3.0 & XM -3.0) are weaker, little changed after February’s slightly lower-than-expected CPI print. Headline printed +2.4% y/y versus +2.5% estimate. Trimmed Mean CPI was +2.7% y/y versus +2.8% y/y in January. 

• Cash US tsys are ~2bps cheaper in today’s Asia-Pac session after yesterday’s modest gains. Wednesday's focus is on Durables/Cap Goods, Tsy 5Y Sale and Fed Speak from MN Fed Kashkari Fed and StL Fed Musalem.
• Yesterday’s pre-election budget included tax cuts and other sweeteners to address voters' cost-of-living concerns. Prime Minister Anthony Albanese hopes to win a second term. The budget is expected to result in a deficit of A$42.1bn in the year through June 2026. Industry groups and economists have criticized it for lacking policy drive to reignite economic growth and improve productivity.
• Cash ACGBs are 3bps cheaper with the AU-US 10-year yield differential at +14bps.
• Swap rates are 2bps higher.
• The bills strip contracts are -3 to -4, with a steepening bias.
• RBA-dated OIS pricing is flat to 3bps firmer across meetings today. A 25bp rate cut in April is given a 3% probability, with a cumulative 65bps of easing priced by year-end (based on an effective cash rate of 4.09%).

The USD has ticked up in recent dealings, although aggregate moves for some of the majors is not much beyond 0.15% at this stage. The BBDXY index was last near 1271.1, slightly up on end Tuesday levels in NY. This is still sub recent highs above 1273 for the index.

• We have had both Japan and Australian inflation related prints. Japan's services PPI was slightly below forecasts at 3.0%, but is just off cycle highs. BoJ Governor is before parliament this morning, largely reiterating recent BoJ rhetoric. The economy is recovering gradually, while inflation goal is expected to be met in 2nd half of the outlook period. High uncertainties remain though.
• USD/JPY has crept higher, last near 150.10/15, still a little distance from Tuesday highs of 150.94.
• In the cross asset space, US yields have firmed since the open, up over 2bps for the 10yr to 4.33%. This offsets yesterday's dip and is likely aiding the USD at the margin. US equity futures are also a touch higher.
• AUD/USD is back under 0.6300, off around 0.15% so far for the session. The Feb monthly CPI was slightly below market expectations, but hasn't shifted A$ sentiment. NZD/USD is back under 0.5725, off by a similar amount to AUD, but is also remaining within recent ranges.
• EUR/USD is back to 1.0780/85, down a touch for the session.
• We only have Japan leading and coincident indices on tap later, which typically aren't market movers. 

The A$ is little changed post the Feb monthly CPI print. We briefly dipped sub 0.6300, but now sit back at 0.6305, little changed for the session. In the bond space, the initial reaction was +2 for ym but now -1. OIS is also little changed. The data showed headline slight below market forecasts (+2.4%, versus 2.5% forecast), while the trimmed mean eased to 2.7%y/y from 2.8%. More details to follow