Futures Back Near Overnight Highs At Lunch Break

JGB futures (147.66, +18 compared to settlement levels) have climbed back toward overnight highs at the lunch break, content to follow US Tsys as they strengthen in Asia-Pac trade, despite a stronger-than-anticipated Japanese CPI. This behaviour likely stems from the market's confidence that the data will have little impact on next week's BoJ monetary policy meeting.

• There hasn’t been much in the way of news flow to flag, outside of newswire headlines flagging a piece run by Kyodo News that suggested the G7 was mulling a near-full ban of Russian exports. The market’s reaction to the news has been minimal given that it comes in the wake of a similar story from BBG (published Thursday).
• Cash JGBs remain mixed across the curve with yields 0.2bp higher to 1.1bp lower with the 2-year benchmark the weakest and the 7-year the strongest. The 10-year JGB is 0.1bp cheaper at 0.473%, below the BoJ's YCC limit of 0.50%.
• Low to average offer/cover ratios in today's BoJ Rinban operations (covering 1- to 25-Year JGBs) may provide some light support in early afternoon trade.
• Swaps curve is flatter with swap spreads tighter across the curve, apart from the 7-year zone.