Choppy Trading After CPI Data, BoJ Rinban Operations Tomorrow

In the Tokyo afternoon session, JGB futures are sitting weaker, -16 compared to settlement levels.

• There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined upside surprise for January’s National CPI.
• The MoF sold Y799.8bn of 5-year Climate Transition Bonds today. The bonds were sold for 99.81, had a yield of 0.339% and will settle on Feb. 28. Daiwa bought 20.89% of the issue.
• (Bloomberg) -- The sustainability of investor demand for Japan’s climate-transition debt is in question even after the five-year note sale beat estimates, according to Shoki Omori, chief desk strategist at Mizuho Securities in Tokyo. (See link)
• Cash JGBs are cheaper across the curve, with the 7-20-year zone (1.1-1.6bps cheaper) leading. The benchmark 10-year yield is 1.1bps higher at 0.697% 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.
• Tomorrow, the local calendar is light, with Leading & Coincident Indices as the highlight.
• The BoJ will also conduct Rinban operations covering 5- to 25-year+ JGBs tomorrow.