Cheaper After BoJ Rinban Results, BoJ Policy Decision On Tuesday

In Tokyo afternoon dealings, JGB futures are holding in positive territory and the middle of today’s range, +7 compared to the settlement levels.

• There hasn’t been much in the way of domestic data drivers to flag, outside of the previously outlined National CPI data, which broadly printed in line with expectations.
• Elsewhere, cash US tsys are dealing 1-2bps cheaper in today’s Asia-Pac session.
• Cash JGBs are dealing mixed but yields are higher than Tokyo lunch break levels after today’s BoJ Rinban operations showed mixed results. There were flat to negative spreads but higher offer cover ratios across the buckets. JGB yields are flat (3-year) to 2.1bps higher (40-year). The benchmark 10-year yield is 0.7bp higher at 0.658% versus the Nov-Dec rally low of 0.555%.
• The swaps curve has bear-steepened, with rates flat to 3.1bps higher. Swap spreads are mostly wider.
• Next week, the local calendar is empty on Monday ahead of the BoJ Policy Decision on Tuesday.
• (MNI ICYMI) The BoJ will likely maintain its easy policy, including negative interest rates and yield curve control, at the Jan 22-23 meeting, despite strong wage hike reports from branch managers, as the economy fails to show signs of meeting the Bank’s 2% inflation target. (See link)
• On Monday the MoF will conduct Liquidity Enhancement Auctions for OTR 5-15.5-year JGBs at 1700 local time.