JPY Swaps: Short-lived 10y bid as Ueda nomination confirmed

Arrow up and down Oct 2022
Hawkish Ueda has been officially nominated as the candidate for the BOJ chief post. This drove some short-lived paying in 10y.

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  • Weak GDP rebound; Ueda officially nominated

  • Short-lived 10y bid after Ueda; 2y bid drives 2s/10s flatter

  • New issues


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Weak GDP rebound; Ueda officially nominated

JGB future opened firmer today, as the latest growth data was weaker than the market had forecast.  


Official data released earlier today showed that the 4Q GDP was up 0.6% quarter-on-quarter, compared to 1% of contraction in the previous period but below economists’ expectations of 2% of growth.  


Dealers said a weak rebound in GDP indicated that the country requires an extended period of monetary stimulus.


The lead bond future rallied further after a confirmation about Kazuo Ueda being nominated as the next BOJ Governor. “His hawkish stance would be a challenge to the country’s economy especially with the latest growth data. This has prompted demand for safe-haven assets,” a dealer said.


In early-afternoon Tokyo trading JGB future was up 17-ticks at 146.81, and the yield on the benchmark 10-year JGB was down a tad at 0.498%



Short-lived 10y bid after Ueda; 2y bid drives 2s/10s flatter

10-year swaps were slightly better offered at the open when it traded half a basis point lower of 0.8425%. Expectations about further tweak to the yield curve control should Ueda be nominated triggered some paying in 10-year at up to around 0.875% in mid-morning domestic trading. However, such paying interest was very short-lived and 10-year turned offered right before lunch break when it traded back down to below 0.825%.


2s/10s swaps were however 2.5bps flatter at 65bps amid paying in 2-year at up to 3bps higher of 0.205%.


Slightly down the curve, 7-year has been slightly better bid and has been traded mostly in a tight range around 0.6475%, up from previous close of 0.635%.



New issues

  • Osaka Prefecture issued JPY20bn in 0.258%, February 25, 2028 bonds.