Futures Back To Mid September Levels, 10yr Yield Fall To 0.72%

JGB futures have pierced the 146.00 level in afternoon trade. Last 146.03, +.70 (highs at 146.06). This is fresh highs back to the first half of September. The Sep 4 high at 146.41 and bull trigger is now within sight.

• BoJ Governor Ueda has appeared before parliament today, largely reiterating the status quo from a policy outlook standpoint. Confidence in achieving the 2% inflation target sustainably is not yet high enough to warrant a meaningful policy shift. The wage-inflation cycle is the key watch point.
• Bloomberg also note possible short covering flows as a catalyst for today's move (see this link).
• JGBs have notably outperformed a fairly steady TYZ back drop, with US futures holding beneath post CPI highs (last 108-27+). The US-JP 10yr government bond yield differential has recovered ground, back to +372bps.
• The cash 10yr JGB yield has fallen 7bps to 0.72%, with similar yield losses up to the 40yr tenor. 10yr swap rates are back to 0.90%, -5bps lower for the session.
• Next week 20-yr supply will be in focus (on the 21st of Nov), while next Friday delivers national CPI data.