Upside Surprise In CPI Has Limited Impact, 5Y Climate Transition Bond Supply Due

In Tokyo morning trade, JGB futures are sitting weaker, -15 compared to settlement levels, after National CPI data surprised on the upside.

• Japan's national average core consumer price index (excluding fresh food) rose 2.0% from the year earlier in January, slowing from the growth of 2.3% seen in December. It marked the third monthly fall.
• The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) increased 3.5% y/y, slowing down from the 3.8% growth last month.
• (Bloomberg) -- Japan will sell sovereign transition bonds for the second time on Tuesday, but investor demand may lag the debut deal as central bank officials send more signals that an interest-rate hike is coming. The finance ministry is planning to price about ¥800 billion ($5.3 billion) of five-year notes that fund efforts to reduce carbon emissions in industries at 12:35 p.m. (See link)
• Cash JGBs are cheaper across the curve, with the 10-20-year zone leading. The benchmark 10-year yield is 1.4bps higher at 0.700% 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 30-year.