Strips Bull Flatten Following BoJ

STIR futures sit firmer across the board in Tuesday trade, with a seemingly dovish pause from the BoJ overnight.

• The BoJ changed the language on the 1% upper bound for the 10-year JGB yield, now referring to it as a "reference point" rather than a strict bound. The move to add more flexibility to the bound was less hawkish than expected after Nikkei reported that the BoJ would tweak the YCC framework after the European session yesterday.
• Strips are seen bull flattening through the whites-blues, with SONIA outperforming at typing. SONIA futures sit 0.5-1.5 ticks firmer in the whites and 5.5-6 ticks firmer in the blues. The softening in the BRC Shop Price Index overnight (to 5.2% Y/Y from 6.2% prior) may be providing additional support here.
• Euribor sits flat to 0.5 ticks higher in the whites and 3-3.5 ticks higher in the blues, in-line French CPI has not moved the needle much. The Eurozone-wide October flash estimate (released at 1000GMT, 1100CET) seems to be tracking at sub-3% at present per MNI's estimates.