Off Best Levels As We Work Through The Day

Bulls failed to test a recovery of the overnight peak in futures, leaving the contract +11 vs. yesterday’s settlement levels as we work towards the Tokyo close. Meanwhile, cash JGBs run little changed to 1bp firmer across the curve.

• The initial richeneing impulse observed in the super-long end has faded a little, aided by a combination of the light cheapening seen in the U.S. Tsy space and the firmer than expected Tokyo CPI prints that we covered earlier.
• Note that the Tokyo CPI excluding fresh food and energy metric is still comfortably below the BoJ’s 2.0% target (printing at +1.4% Y/Y in August), with the Bank continuing to reaffirm its on hold stance as the current inflationary pressures are dominated by cost-push, not demand-pull factors, leaving the Bank pointing to the need for a continued and elongated extension of more notable wage growth.
• Issuance wise, a Y75bn multi-tranche round of samurai paper from Mexico (flagged earlier this week) provided the highlight.
• Looking ahead, Monday’s domestic docket is pretty empty, with only lower tier economic data releases due.