A Touch Cheaper Early On

Futures nudge lower in early Tokyo trade, last -7, operating comfortably within the confines of the overnight session range, while cash JGBs run flat to 1.5bp cheaper across the curve, with 20s leading the weakness. This modest cheapening comes as domestic participants assess Thursday’s notable cross-market swings and weigh up the impact of the firmer than expected U.S. CPI print.

• USD/JPY has nudged higher during early Tokyo dealing, printing ~40pips off of Thursday’s multi-decade peak. A reminder that a sharp move lower in USD/JPY during NY hours generated speculation re: fresh intervention from the Japanese authorities, with an MoF official providing no comment when questioned on the matter.
• MoF security flow data covering last week revealed that foreign investors were net sellers of Japanese bonds for a third consecutive week. Although the net selling was rather paltry when compared to levels observed over the two prior weeks, as 10-Year JGB yields operated around the upper end of the BoJ’s permitted YCC boundary, while the Bank has continued to reaffirm its support for its current policy settings.