JPY Swaps: 10y bid fades ahead of data; Good-sized belly flow

Paying in 10y JPY swaps faded in the afternoon ahead of key data. The mid-sector saw some good-sized flows over the past few sessions.

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  • More JGB future sell off after lunch break

  • 10y bid fades; Good-sized 5-7y flows

  • New issues



More JGB future sell off after lunch break

The selloff in USD rates, which was triggered by weak demand of the 10-year auction, has been extended to Asia including in Japan.


JGB future therefore opened weaker and was down by 15-ticks soon after market open. The selloff intensified after lunch break and the lead bond future was down to intraday low of 148 before closing the day 13-ticks lower at 148.05. The yield on the benchmark 10-year JGB was unchanged at 0.248%.



10y bid fades; Good-sized 5-7y flows

Trade flow has been light ahead of the US CPI data later tonight, as well as domestic Tankan survey results and industrial production data due tomorrow.


A dealer reported light reaction to the move in the USD rates market in cautious trading today, with 10-year swaps traded up to 1.5bps higher of 0.615% in the morning session. Paying there ceased after mid-day as players then parked on the sidelines ahead of some key data, and 10-year was last seen changing hands unchanged of 0.6%. Earlier paying in 10-year saw 2s/10s swaps steepening by 1.5bps to around 48.5bps, but the slope flattened out by 0.75bp to 46.5bps at time of writing amid price action at the front-end due to the move in the currency market.


The yen has weakened against the USD since overnight trading. The pair has been traded firmly above 137.4 in domestic trading today, compared to levels as low as below 136.5 on Monday Tokyo trading. This has prompted some upward pressure on 2-year swap rate, and it was paid up to above 0.13% intraday, up from previous close of around 0.1275%.


Surprisingly, the superlong-end saw some light receiving interest. 20-year, for example, was offered down to a basis point lower of 1% in mid-afternoon domestic trading. 10s/20s swaps flattened out by 0.5bp to 40.75bps as a result.


At the mid-sector, a trader noticed some good-sized 5- and 7-year flows over the past few sessions, including a few 7-year that traded through 0.4525%, and 5-year at 0.323% today. The source suspected they have been driven by hedging needs



New issues

  • Activia Properties Inc raised via Nikko JPY2bn by selling 0.82%, December 17, 2032 bonds.


  • Sumitomo Mitsui Trust Bank Ltd issued JPY10bn in December 20, 2032 bonds with semi-annual call at par from December 2027. Lead is Daiwa.