JPY Swaps: Good 30y auction; 5-10y bid on wage growth

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Stronger-than-expected wage growth in Japan has prompted paying in the 5-10y area of the swap curve. 30y auction drew the highest demand in a year.

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  • JGB future trims losses after good 30y auction

  • Good 5y bid; Yen’s move backs 2y payers


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JGB future trims losses after good 30y auction

Losses in the USD rates market in overnight trading, together with domestic data, have prompted further selloff in JPY rates today.


Official data released earlier today showed that wages in Japan was up 4.8% year-on-year in December, up from 1.9% in the previous period and beating economists’ expectation of 2.5%


However, a rather satisfactory JGB auction had helped trimmed losses.


Earlier today, the MOF sold JPY899.6bn worth of its JPY900bn 30-year 1.6% JGBs (Number 77R) at tender with a cover ratio of 3e.32 times, or the highest in a year. Average yield was 1.543%. The tail widened out from 0.10 to 0.15.


JGB future was down by 27-ticks in earlier trading, but was marked 10-ticks lower at 146.84 in mid-afternoon Tokyo trading. The yield on the benchmark 10-year JGB was half a basis point lower at 0.492%.



Good 5y bid; Yen’s move backs 2y payers

Flow wise, 5-year has seen some relatively busier flows, backed by paying interest there. It traded up to above 0.48% in the morning but there were also trades at a tad higher of 0.44% before and after lunch break.


10-year have been bid and traded mostly in a tight range around 0.875%, or about 4.5bps higher than yesterday’s close.  


Elsewhere, the weakness in the yen, suggested by USD/JPY traded above 132.9 in the US session on Monday, triggered some paying in 2-year at about 2bps higher of 0.2075% before mid-day.


2s/10s swaps nevertheless steepened up by 0.75bp to 65.25bps as 10-year has been slightly underperforming the shorter-end on the selloff.