Flatter, Lifers Perhaps Dipping Into Longer End

JGB futures nudged higher at the re-open before backing off to flirt with neutral levels, hitting the break +3 vs. yesterday’s settlement after a very limited round of morning dealing. Cash JGB trade has been subjected to bull flattening flows, after instances of bear and twist flattening across the core global FI space on Thursday, with the major benchmarks running 0.5-2.5bp richer, perhaps indicating continued domestic lifer demand for super-long JGBs.

• Domestic headline flow remains limited, with the only real point of note being the 0.2ppt uptick observed across each of the 3 major Y/Y CPI readings (which was in line with exp., outside of the CPI excluding fresh food and energy measure, which provided a 0.1ppt beat vs. expectations). Note that the excluding fresh food and energy measure remains some way shy of the BoJ’s 2% target, operating at +1.2% Y/Y.