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Futures went in to the Tokyo lunch break 10....>

JGBS: Futures went in to the Tokyo lunch break 10 ticks higher at 150.93 as the
curve flattened, with 10-Year yields last at 0.05% (-0.6bp), after registering
YtD lows of 0.042%.
- Most of the uptick in prices came after yesterday's settlement as US yields
edged back from Wednesday's levels.
- Looking at today's session, the latest Japanese CPI data came and went without
any notable market reaction after it provided a modest beat against estimates,
as all 3 readings remained well shy of the BoJ's elusive 2% target. 
- The BoJ's latest batch of Rinban operations passed fairly smoothly, however
the offer to cover ratio in the 10-25 Year bucket dipped to 2.43 from 3.47 last
time out, so we will watch for any reaction in this sector in the afternoon. 
- One of the more prominent thought processes in play following the recent
uptick in US yields is that if Japanese longer dated yields continue to dip &
US-10 Year yields breach 3.00% then we could see Japanese lifers & pension funds
begin to move their allocations into Tsys in an unhedged manner, which could
limit the flattening of the longer end of the Japanese curve.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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