Twist-Flattener, Climate Transition Bond Included In BoJ’s Rinban Operations

JGB futures are flat in the Tokyo afternoon session and are sitting in the middle of today’s range, unchanged compared to the settlement level.

• There hasn’t been much in the way of domestic drivers to flag, outside of Trade Balance data. Machine Tool Orders data is due later.
• The results of today’s BoJ Rinban operations covering 1-10-year JGBs showed mixed results. The 1-3 and 3-5-year buckets saw positive spreads and higher offer cover ratios, but the 5-10-year bucket saw a small negative spread and a lower cover ratio versus the last outing.
• The BoJ included the nation’s first climate-transition government note in today's debt-purchase operation. Japan sold its first climate transition note on Feb. 14.
• The cash JGB curve has twist-flattened, pivoting at the 10s, with yields 2bps higher (1-year) to 4.5bps lower (40-year). The benchmark 20-year yield is 2.7bps lower at 1.462%, extending yesterday’s post-supply rally.
• The swaps curve has slightly bull-flattened, with rates flat to 2bps lower. Swap spreads are mostly wider.
• Tomorrow, the local calendar sees Weekly International Investment Flows, Jibun Bank PMIs (Preliminary) and Dept Store Sales. The MoF will also conduct a Liquidity Enhancement Auction for 5-15.5-year OTR JGBs.