JGBs trod higher early on, on exp. that the....>

JGBS: JGBs trod higher early on, on exp. that the BOJ would up the size of its

5-10 Year Rinban ops. The space also drew support from the latest sell-off in

the Nikkei 225, which was hampered by an earthquake in Japan & comes shortly

after a Typhoon hit earlier this week. There was also talk of paid swap unwinds

from abroad, which weighed on the longer end of the swaps curve, allowing the

JGB curve to steepen. The BOJ delivered & upped the size of 5-10 Year Rinban ops

by Y50bn, in line with the upping of the 1-3 & 3-5 Year purchases by Y50bn a

piece earlier this week. This was largely exp. following the trimming of the

quantity of ops in the bucket in Sep (to 5 from 6), which will result in a

slightly lower amount of purchases if the size of the Rinban ops are held

constant with those conducted this week.

- The space was also supported by remarks from BOJ's Kataoka, who reiterated

that it is appropriate for the BOJ to conduct additional easing to quicken the

achievement of its CPI goal. He noted that he didn't see the need to allow long

term yields to move more flexibly when the BOJ is cutting its CPI exp. We

already knew that Kataoka dissented at the Bank's July MonPol decision.