[MARKET ANALYSIS] Bearish bias from APAC trade, driven by JGBs. Fixed now looks to US CPI.

• JGBs led the downside overnight as the "Takaichi trade" resumed. For more details, see the 08:55GMT Market Update.
• Amidst this, USTs and Bunds also found themselves lower. USTs by just a handful of ticks and holding above the 112-00 mark and by extension yesterday's trough, which was half a tick below that.
• USTs await insight, primarily, on two points.
• 1) The Fed Chair investigation & fallout. As Treasury Secretary Bessent reportedly told POTUS that the investigation is a mess and a potential market negative. Adding that he believes Powell will now be "dug in", i.e. that he won't leave when Trump names a new Chair.
• 2) US CPI. Consensus looks for the headline M/M, and Y/Y prints to remain at 0.3% and 2.7% while both core figures are seen higher by a tenth at 0.3% and 2.7% respectively. Goldman Sachs looks for a hotter print driven by technical factors.
• Bunds in-fitting with the above, at a 127.89 low with downside of 28 ticks at most. Shortly looking out for results from the first tap of a new 2031 Bobl. More generally, action for today will likely be dictated by US CPI. If the bearish bias extends, we look to support at 127.89, 127.82 and 127.70 from the last three sessions.
• Gilts gapped lower by 14 ticks at the open, acknowledging the bearish bias from APAC trade, before dipping further to a 92.30 base. Since, the benchmark has recovered to opening levels. No reaction to the passing of I/L supply while the interview with BoE's Bailey took place this morning, but the text won't be published until January 16th.

The bearish bias from APAC trade, particularly influenced by JGB movements, signals cautious sentiment ahead of the US CPI data release. Given expectations for a potentially hotter CPI print from Goldman Sachs, market participants are likely to recalibrate their positioning, particularly in USTs and Bunds, which may shift discourse around Fed monetary policy ahead of any rate decisions.