JGBs trod higher early on Thursday, on exp.....>

JGBS: JGBs trod higher early on Thursday, 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.