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

 

Click here for SDR JPY IRS trades

 

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.

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