JPY Swaps: 10y bid despite China Covid concerns; FX backs 1y paying

COVID Red
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10y JPY swaps saw paying despite concerns over the Covid situation in China and the recent move in oil prices. FX move backed 1y bid.

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  • JGB future weaker

  • 10y payers despite China Covid concerns; FX backs front-end bid

  • New issues

 

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JGB future weaker

JGB future opened weaker today, despite a mixed session in the US treasury market.

 

On Monday, the US treasury curve flattened out with 2-year up by 2bps, as recent comments from the US still pointed to continuous interest rate hike at the pace that the market had previous forecast without any indication of a slowdown. 10-year yield was down by 7bps intraday following oil prices tumbling to 10-month lows in earlier trading.

 

The selloff in the JPY rates market intensified after lunch break with JGB future down by 14-ticks intraday before closing the day 10-ticks lower at 149.34. The yield on the benchmark 10-year JGB was marginally higher at 0.243%.

 

 

10y payers despite China Covid concerns; FX backs front-end bid

Trading in swaps has not been overly busy ahead of the bank holiday tomorrow.

 

A swapper reported a slightly better paying session in swaps with flows mostly in the most liquid tenors, despite general concerns over the Covid situation in China and the recent decline in oil prices. 10-year, for example, went through a tad below 0.53% in the morning before traded mostly between 0.5-1bp higher of 0.53% and 0.535% the rest of the day.

 

There were some sporadic flows at the belly up until mid-day, with 7-year traded 0.75bp higher at 0.365% and 5-year traded up to 2.5bps higher of 0.265%.

 

Elsewhere, further weakness in the yen has prompted a couple of paying at the very front-end of the curve. 1-year therefore traded 0.5bp higher of 0.035% in the morning.

 

2s/10s swaps steepened up marginally to 42.25bps while 10s/20s flattened out by a tad to 46.5bps.

 

 

New issues

  • Mitsui Mining & Smelting Co Ltd sold JPY10bn in 0.58%, November 29, 2027 bonds.