Firmer & Flatter To Start, Tokyo Buys Overnight Dip In Futures

Tokyo buys the overnight dip in futures during early Friday trade, with the contract last +6 (still unable to break its post-BoJ spike peak).

• Continued post-BoJ adjustments and the lack of upside surprise in the national CPI data (albeit with the major metrics moving to fresh cycle highs in Y/Y terms) are likely in the driving seat.
• Cash JGBs last print 0.5-5.5bp richer across the curve, with a bull flattening move in play.
• 10-Year JGB yields now operate 10bp shy of the BoJ’s YCC upper boundary but haven’t tested their post-BoJ low.
• Swap rates are lower, but lag the move in bonds, with swap spread widening observed.
• Focus moves to the impending round of BoJ Rinban operations (covering 1- to 10- & 25+Year JGBs), with an eye on the size of the purchases after the BoJ doubled down on its existing YCC settings earlier this week.