This article explains why the SRX drops packets to and from 169.254/16 address.
SRX is not forwarding packets to or from 169.254/16 address. Security flow traceoptions show the following error:
RT: packet dropped, Non-self packet with link-local address RT: flow find session returns error.
This is the link local address (the address a host uses when none is configured or provided by DHCP). According to RFC3927 (see item 7, Router Considerations),
A non-reserved address must be used for the host.