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.