BoJ Dec Minutes & 5-Year Op Results Eyed

JGB futures were little changed come the end of the final overnight session of last week, finishing -1 after a hawkish round of ECB speak and a cheaper round of trade for U.S. Tsys unwound the early bid in the contract. Friday’s Tokyo high was not breached.

• The weekend saw Japanese PM Kishida note that he will nominate a new BoJ Governor next month, while he stressed that it is too early to discuss a potential revision to the government-BoJ accord
• The minutes from the December BoJ decision (which saw the surprise YCC tweak) will be released today and will get more attention than usual owing to the unexpected tweak to monetary policy settings that took place at that meeting.
• Elsewhere, we will get the results from the BoJ’s 5-Year offering through its Funds-Supplying Operations against Pooled Collateral channel. A quick reminder that the parameters of these operations were tweaked at last week’s BoJ meeting, essentially providing a deeper backstop for the BoJ’s YCC mechanism. The interest rate applied to the operations is variable, with BoJ Governor Kuroda choosing not to rule out the potential for a negative rate to be applied to the operations (the operations essentially incentivise carry trades in swaps and JGBs).