Richer, CPI In View

TYH3 deals at 114-18, +0-04, 0-04 off the top of its 0-11 range, on volume of ~97K.

• Cash Tsys have bull flattened, dealing 0.5-2.5bp firmer across the major benchmarks.
• Tsys were pressured in early Asia-Pac trade as speculation in the Japanese press re: a review of the side effects of the Bank's ultra-loose policy settings being conducted at next week's monetary policy meeting weighed.
• ACGBs then led a bid, allowing Tsys to turn richer on the day. There was no clear headline catalyst for the richening, with some pointing to softer than expected Chinese PPI data, but the nature of the move didn't back that idea up, in our view.
• TY dealt through Wednesday's high on the move.
• Tsys have ticked away from best levels as we approach the European session, as JGBs came under fresh pressure into the Tokyo close.
• The flow side was highlighted by a block buyer in UXY (908 lots).
• Dec's CPI print headlines the macro docket today (MNI’s preview is here), we also have weekly jobless claims as data as well as Dec real avg earnings. There is Fedspeak from Philadelphia Fed President Harker, St Louis Fed President Bullard and Richmond Fed President Barkin. On the supply side we have the latest 30-Year auction.