PREVIEW: 2-Year Supply Due

The Japanese MOF will today sell Y3.0tn of 2-Year JGB's opening JB#422. The MOF last sold 2-Year debt on January 28, the auction drew cover of 4.972x at an average yield of -0.127%, average price of 100.456, high yield of -0.124%, low price of 100.450, with 13.9251% of bids allotted at the high yield.

• A hard auction to gauge truth be told, with the recent cheapening representing a slightly more attractive outright entry point, while those looking for further curve steepening may look to establish longs (N.B. the 2-/10-Year yield spread now sits at the steepest levels witnessed since the March '20 vol., so there may be limited appetite for such a trade)., although many may stay sidelined ahead of the March BoJ decision, given the uncertainty re: tweaks to BoJ policy at the end of its ongoing monetary policy review.
• The BoJ's active Rinban operations and on hold stance re: its key interest rate will generate an underlying bid, but the question of how strong the overall bid will be is muddied by the above points and the recent broader cheapening of core global FI.
• Results due at 0335GMT/1235JST.