I believe the BOJ has a much bigger impact on today’s trading than CPI. I think the BOJ has a much bigger impact on today’s trading than CPI. The fresh hints overnight that the BOJ will end yield curve control next week ignited a surge in the yen.
Japanese debt has been dumped in favour of Treasuries wherever possible, which has put a bid into US fixed income. As a result, yields have fallen 8–13bps across the curve. Certainly, CPI and the growing likelihood of a 50bps hike on February 1 have aided the bond buying, but there is also a feedback loop. The bond buying has led to USD selling and demand in equities.
In Europe, the headwinds are waning as deflation in TTF prices (albeit they are still 2x more expensive than they were two years ago) and that European consumers stand up. As the valuation trade is in full swing with money moving from the US to China, Europe, and emerging markets, it is.