JPY Swaps: FX drives front-end offers; SL given despite strong Nikkei

• Bond future rallies post-Powell and as consumer confidence fails

• Front-end given on yen’s spike

• New issues: CA and Berkshire Hathaway finalise deals

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Bond future rallies post-Powell and as consumer confidence fails

Consumer confidence in Japan fell further in November. Analysts had forecast it to improve from 29.9 in October to 30.0, but the final data print stood at 28.6. This, together with dovish Powell’s comments in overnight trading, backed a good rally in the JPY rates market.

At a Brookings Institution event, Powell said the time for moderating the pace of rate hikes may come as soon as December. The front- to belly area of the USD rates curve rallied as the hike premium was unwound, and the market shifted it pricing to policy peak rate at under 5% by May/June.

JGB future rallied by 39-ticks intraday before trimming gains to close the day 25-ticks higher at 148.97. The yield on the benchmark 10-year JGB was down half a basis point at 0.244%.

Front-end given on yen’s spike

Swappers cheered about the change of tone of the US Fed. 10-year swaps have been offered in small size, though the price has not been wild. A dealer reported receiving in a tight range around 0.59% in the morning before traded down to 2.5bps lower of 0.575% near market close.

2s/10s swaps flattened out by only 0.25bp to 47.5bps, as there have been receiving at the front-end due to a wilder reaction in the currency market.

The USD has weakened against the JPY since overnight trading. The downtrend continued in Tokyo on Thursday when the pair fell all the way down to around 136.2. This compared to those traded near 138.9 in the US session before Powell.

The strength in the yen has triggered good amount of good-sized receiving in 2-year at down to almost a basis point lower of below 0.12%.

Receiving has also been extended to beyond the 10-year point. A dealer said the rally in the Nikkei today has failed to trigger superlong paying. Indeed, the move in the FX market has prompted thoughts about an imminent selloff in the Nikkei and thus receiving interest at the back-end.

20- and 30-year therefore traded down 2-3bps lower at the in the morning session, though flow has been light, according to the source.

10s/20s and 10s/30s are currently little changed at around 45bps and 63.75bps respectively.

New issues: CA and Berkshire Hathaway finalise deals

• Asahi Kasei Corp issued JPY50bn worth of bonds as follows:

   

  • JPY20bn, 0.41%, December 7, 2027 at 29bps over JGBs.

  • JPY20bn, 0.669%, December 7, 2032 bonds at 42bps over JGBs.

  • JPY10bn, 0.23%, December 5, 2025.

   

• American multinational conglomerate holding company Berkshire Hathaway wrapped up its JPY11.5bn multi-tranche bond deal as follows:

   

  • JPY55bn, 0.783%, December 8, 2025 at +60bps.

  • JPY41.5bn, 1.029%, December 8, 2027 at +75bps.

  • JPY1bn, 1.18%, December 7, 2029 at +77bps.

  • JPY4bn, 1.452%, December 8, 2032 at +87bps.

  • JPY5.1bn, 2.003%, December 8, 2042 at + 97bps.

  • JPY8.4bn, 2.368%, December 6, 2052 at +115bps.

   

  The planned 15-year issue was dropped in the end. Leads are BofA and Mizuho.

   

• France-based Credit Agricole priced, over TONA mid-swaps, JPY96.8bn in a 4-tranche senior preferred and senior non-preferred unsecured Samurai deal at the top-end of initial price guidance as follows:

   

  • JPY35.4bn, 0.763%, December 5, 2025 at +58bps.

  • JPY33.1bn, 0.979%, December 7, 2027 at +70bps.

  • JPY17.7bn, 1.383%, December 7, 2026 with single call at par in December 2025 at + 120bps.

  • JPY10.6bn, 1.53%, December 2028 with single call at par in December 7, 2027 at +125bps.

   

• Electric Power Development issued JPY15bn in 0.45%, April 20, 2026 bonds.

   

• Hokkaido Electric Power raised JPY44.5bn via selling the following bonds:

   

  • JPY10bn, 0.36%, December 25, 2025.

  • JPY21bn, 0.68%, December 24, 2027.

  • JPY16.5bn, 1.05%, December 24, 2032.

  • JPY7bn, 1.45%, December 25, 2042.