JPY Swaps: 10y given after China data; Pre-auction 30y bid

Chart up line Oct 2022
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Weak trade data from China has triggered receiving in 10y JPY swaps in the afternoon session. There was some pre-auction paying in 30y.

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  • JGB future rebounds after China data

  • 10y offers; Pre-auction 30y bid

  • New issues

 

Click here for SDR JPY IRS trades

 

JGB future rebounds after China data

JGB future was weaker in the morning, tracking the losses in the US treasury market in overnight trading. The lead bond future then erased all the losses after lunch break.

 

Market participants said the rally in the afternoon session was prompted by an unexpectedly sharp contraction in import in China last month. The data suggested that demand from China has not recovered despite relaxation of Covid restrictions there, and that would affect exports from Japan.   

Market players then had a look back to earlier domestic data which showed that wage growth in January was 0.8% year-on-year, down from 4.1% in the previous month and below economists’ forecast of 1.8%. Real cash earning showed a 4.1% annual contraction, after 0.6% of contraction in December and more serious that the 3.2% of negative growth as had been predicted by the market.

 

JGB future was up by 7-ticks intraday before closing the day 6-tick higher at 146.87. The yield on the benchmark 10-year JGB was marginally lower at 0.498%.

 

 

10y offers; Pre-auction 30y bid

10-year swaps have been mostly offered with trades down to 0.83%, compared to those traded about 0.86% near market close on the previous day. 2s/10s swaps steepened up by 0.75bp to 67bps.

 

Up the maturity spectrum, there was some light pre-auction paying in 30-year at 1.265% in the morning, and the slightly weaker-than-expected demand at the sale has supported some price action there in the afternoon session.

 

Earlier today, the MOF sold JPY899.5bn worth of its JPY900bn 30-year 1.6% JGBs (Number 77R) at tender. The auction drew bids worth 3.00 times, down from 3.32 times last month. Average yield was 1.416%. The tail widened out from 0.15 last month to 0.19.

 

30-year was marked about a basis point higher of 1.24% at time of writing.

 

7-year has been busily traded, with paying in the morning at up to 6bps higher, easing to about 4bps higher after mid-day. 2s/7s steepened up by 0.75bp to 44.5bps.

 

 

New issues

  • Major Joint Local Bond issued JPY102bn in 0.75%, March 25, 2033 bonds at 25bps over JGBs.

     

  • Mitsubishi Chemical Group Corp raised JPY28bn via selling the following bonds:

     

    • JPY18bn, 1.18%, March 15, 2033.

    • JPY10bn, 0.579%, March 15, 2028 at JGBs + 35bps.

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