2Y Yield Rises To Highest Level Since 2011

At the Tokyo lunch break, JGB futures are sitting weaker, -17 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined National CPI data, which surprised on the high side.
• (Bloomberg) -- Japan will sell sovereign transition bonds for the second time on Tuesday, but investor demand may lag the debut deal as central bank officials send more signals that an interest-rate hike is coming. The finance ministry is planning to price about ¥800 billion ($5.3 billion) of five-year notes that fund efforts to reduce carbon emissions in industries. (See link)
• (Bloomberg) -- Japan’s two-year bond yield climbed to the highest level since 2011 amid growing speculation the central bank will abandon its negative-interest-rate policy in coming months. (See link)
• Cash JGBs are cheaper across the curve, with the 10-20-year zone leading. The benchmark 10-year yield is 1.5bps higher at 0.701% versus the Nov-Dec rally low of 0.555% and the Feb high of 0.770%.
• The swaps curve has slightly bear-steepened, with rates flat to 2bps higher. Swap spreads are tighter out to the 20-year.