Richer, BoJ-Related Flows Dominate

TYH3 deals at 114-29+, +0-08, as it retreats from the top of a 0-20 range, on very strong volume of ~259K.

• Cash Tsys are running 2-6bp richer across major benchmarks, with 7s and 10s leading the bid.
• Any early round of modest cheapening was observed in Asia trade, in the absence of any headline driver there was perhaps some pre-BoJ positioning in Tsys (albeit with JGB futures bid).
• Tsys then firmed in the immediate aftermath of the BoJ decision, as the Bank left all major policy parameters unchanged. The BoJ's decision was in line with the view of most economists, although it was at odds with well-documented JGB market pricing.
• JGBs are off best levels late in Tokyo trade, facilitating a similar move in Tsys.
• In Europe today CPI data from the UK and the Eurozone (final) provide the highlights. Further out we have a slew of US data including Retail Sales, PPI and Industrial Production as well as the Fed' s Beige Book. There will be Fedspeak from Atlanta Fed President Bostic, Philadelphia Fed President Harker and St Louis Fed President Bullard. We also have the latest round of 20-Year supply and a meeting between Yellen & Liu He.