JPY Swaps: Good 5-10y bid steepens curve further

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JPY swaps have been bid despite earlier gains in the underlying cash bond market. Good 10y bid has steepened 2s/10s and 5s/10s further.

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  • Gains in USTs backs a short-lived JGB rally

  • Good 5-10y bid; Curve steepens further

  • New issues


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Gains in USTs backs a short-lived JGB rally

The gains in US treasuries in overnight trading supported an early rally in JPY rates when JGB future was up by 13-ticks. The market then erased all the gains after lunch break and was down by 10-ticks before recovering to mark 5-ticks lower at 147.34 in mid-afternoon domestic trading. The yield on the benchmark 10-year JGB was up 2.5bps at 0.435%.


Market participants said the sentiment has been more about selling off JPY rates, extending the momentum from the previous day, and so the US-induced rally in earlier trading was not sustainable. However, with 10-year JGB yield now well above 0.4% dealers would begin to be cautious about selling off further, according to a source.



Good 5-10y bid; Curve steepens further

Trading in swaps has been reasonably busy on the day, backed mainly by paying interest in the 5- to 10-year area of the curve and contrasting the gains in the underlying cash bond market in the morning session.


10-year swaps were paid up 2.75bps at the open before paying eased off a tad in mid-morning domestic trading when it traded only a basis point higher. More aggressive paying emerged after mid-day when 10-year was traded 4-6bps higher of up to 0.8375%.


Slightly down the curve, 5- and 7-year traded up to 5.5-6.5bps higher near market close at 0.4625% and 0.6275% respectively. They were marked around 1.5bps higher at time of writing.


2s/10s and 5s/10s swaps steepened up further by 2.5bps and 1.5bps to 63.25bps and 39.5bps respectively.



New issues

  • Narita Airport raised JPY54.6bn via a 4-tranche deal as follows:


    • JPY8.9bn, 1.5%, February 2, 2040.

    • JPY23bn, 0.504%, February 2, 2028 at JGBs + 34bps.

    • JPY6.7bn, 0.9%, February 2, 2033.

    • JPY16bn, 0.281%, January 31, 2025 at JGBs + 29bps.