- Bond future slumps as Tokyo inflation spikes
- Light 2-10y bid; 2s/7s and 2s/10s steeper
- New issues
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Bond future slumps as Tokyo inflation spikes
JGB future slumped today, following a surprise in domestic data and sluggish demand at the auction.
Official data released earlier today showed that inflation in Tokyo was up 3.8% year-on-year in November, up from 3.5% in the previous month and above economists’ expectations of 3.6%
The MOF sold JPY2.4996trn worth of its JPY2.5trn 5-year 0.005% JGBs (Number 15R) at tender today. The auction drew bids worth 2.35 times, down slightly from 2.70 times last month. Average yield was 1.58%. The tail tightened from 2.70 last month to 2.35.
JGB future fell soon after market open, and the momentum intensified in the afternoon after the JGB auction. In mid-afternoon Tokyo trading the lead bond future was down 46-ticks at 148.92, and the yield on the benchmark 10-year JGB was up half a basis point to 0.248%.
Light 2-10y bid; 2s/7s and 2s/10s steeper
Trading in swaps has been subdued today. A dealer reported sporadic paying in swaps since market open. The source reckoned players would stay in a cautious mode until the release of domestic unemployment and retails sales data near the middle of next week.
According to the source, 10-year swaps traded mostly in a tight range around 4.75bps higher of 0.555% in the morning, but was further paid up to 0.57% after lunch break.
2s/10s swaps steepened up by 1.75bps to 44.25bps, despite a couple of paying in 2-year at a basis point higher of 0.1175% up until mid-day.
2s/7s swaps, on the other hand, steepened up by 1.75bps to 27.5bps amid paying in 7-year. Another player noticed 7-year bid at up to 3.5bps higher of 0.4% in the afternoon session but blamed the big move in price to lack of trade flow on the day.
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