TARIFFS: US Softens India Trade Agreement Amid Farm Protests

SFIZ6 97.00c, bought for 7.5 in 13.5k.

• Japanese investors sold net 351bln of Gilts in November, the largest single-month net sale in 14 years, and the first month of sales since February.  Pre-Autumn Budget uncertainty was the likely driver of these dynamics.
• Elsewhere, Japanese investors reversed October’s net sales of German bonds, with JPY423bln of net buying. This brings year-to-date flows into German bonds back into positive territory.
• There was a second consecutive month of net sales of French bonds (JPY226bln after JPY576bln in October). Like the UK, we suspect that uncertainty around budget negotiations (which is ongoing today) was a contributor here.
• Japanese investors were net buyers of Italian and US bonds in November.
• Domestic bonds and the yen have sold-off in tandem in recent sessions, amid prospects of PM Takaichi calling a snap election to strengthen her mandate and deliver on expansionary fiscal promises. The weakening currency may deter foreign investors from engaging in Japanese assets on an unhedged basis. Meanwhile, Deutsche Bank have noted that “We are increasingly concerned that higher yields are more revealing of stress, than of genuine value in the eyes of domestic investors”.  Timely weekly flows data has seen a pullback in the Japanese buying of foreign bonds and foreign buying of Japanese bonds.

SFIZ6 96.65/96.75/97.05/97.15c condor vs 96.25p, bought the condor for half in 3k.