JPY Swaps: Good 7-10y offers after data; FX-driven 2y flow

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Domestic data and the rally in the USD rates market have backed demand for JPY rates. 7-10y swaps saw good offers. 2y saw earlier bid amid FX move.

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  • JGB future firmer after data

  • Good 7-10y offers; JPY move backs 2y bid

  • New issues


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JGB future firmer after data

Weak domestic industrial production data and alarming retail sales data, together with the rally in the USD rates market, have backed a rebound in the JPY rates market today.


On Monday, USD treasury rose with 2-year retreating from nearly its 16-year high. The move was a continuous demand for safe haven assets due to the stronger-than-expected PCE inflation gauge that was released on Friday.


Official data released this morning showed that industrial production in Japan was down 2.3% in January year-on-year, compared to 2.4% of contraction in the previous month. Economists had forecast only 0.7% of negative growth. Retail sales in the same month was however up 6.3% year-on-year, beating market expectations of 4% of growth, and compared to 3.8% in the previous month.


JGB future closed the day 19-ticks higher at 146.65, and the yield on the benchmark 10-year JGB was half a basis point lower at 0.495%.



Good 7-10y offers; JPY move backs 2y bid

The rally in the bond future has prompted decent amount of receiving in the 7- to 10-year area of the swap curve.


A dealer reported offered-side flows in 10-year at down to below 0.82%, compared to those traded around 0.845% near market close on the previous day. 7-year has been busily traded and went through down to 0.605% near market close, compared to previous close of about 0.625%.


Elsewhere the JPY hovering around its recent weak levels against the USD has supported paying in 2-year at up to 1.25bps higher of 0.2%. 2-year was however marked 0.75bp lower at time of writing, leaving 2s/10s swaps 1.5bps steeper at 63.75bps.



New issues

  • Deutsche Bank issued JPY10bn in 1.51% March 7, 2028 callables with single call at par in March 2027.


  • Fuyo General Lease raised JPY50bn via selling the following bonds:


    • JPY30bn, 0.3%, March 6, 2026.

    • JPY20bn, 0.709%, March 7, 2028 at JGBs + 47bps.


  • Mitsubishi UFJ Financial Group sold the following bonds:


    • JPY27.5bn, March 7, 2034 that pays 1.47% till the single call at par in March 2033, then 45.7bps over JPY 6M Tibor.

    • JPY49.5, March 5, 2027 that pays 0.77% till the single call at par in March 2026, then 31.8bps over JPY 6M Tibor.

    • JPY46bn, March 7, 2029 paying 1.029% till the single call at par in March 2028, the JPY 6M Tibor + 39.7bps.

    • JPY109.5bn, March 7, 2027 paying 0.606% till the single call at par in March 2024, then 37.4bps over JPY 6M Tibor.


    Lead is MUMSS.


  • Orient Corp issued JPY20bn worth of bonds in two equal tranches as follows:


    • 0.37%, March 6, 2025.

    • 0.839%, March 6, 2028 at 60bps over JGBs.


  • Select Access Investment raised JPY12bn by selling the following bonds via DB:


    • JPY10bn, 0.45%, March 15, 2024.

    • JPY2bn, 0.6%, March 14, 2025.


  • Sumitomo Mitsui Financial Group has launched a 4-tranche fixed-rate USD bond offer with final pricing expected later today:


    • 3y bond at +125-130bps.

    • 5y bond at +160-165bps.

    • 7y bond at +175-180bps.

    • 10y bond at +190-195bps.


    Lead is SMBC Nikko.