JPY Swaps: BOJ to stay after dovish US Fed; Swaps given; Long-end flatter

• Dovish US Fed eases pressure on BOJ policy move

• 10y given; SL offers flattens long-end curve

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Dovish US Fed eases pressure on BOJ policy move

The JPY rates market was firmer today, tracking the gains in the USD rates market on Wednesday.

In overnight trading, 2-year UST yield was down by more than 15bps, as the dovish remarks by the US Fed following its 25bp hike have prompted expectation that the board is ready for a cut. This has eased much of the pressure for the next BOJ Governor, Ueda, to adjust the ultra-loose monetary policy in Japan.

JGB future was up by 42-ticks in the morning session before trimming gains to mark 21-ticks higher at 148.49 in mid-afternoon Tokyo trading. The yield on the benchmark 10-year JGB was down 3bps at 0.293%.

10y given; SL offers flattens long-end curve

Earlier strong rally in JGB future saw good amount of receiving in 10-year. A trader noticed 10-year trades at down to 0.5725% in earlier morning trading although the majority of the flow has been in a tight range around 0.585%. These compared to previous close of 0.6125%.

Elsewhere the sharp appreciation in the yen following the slump in front-end USD rates has supported some receiving in 2-year and it traded mostly around a basis point lower. 2s/10s swaps flattened out by 2bps to 47.75bps at time of writing.

USD/JPY fell to below 130.5 in domestic trading today, down from levels above 133 before the US Fed decision.

20-year swaps, on the other hand, traded 2-3bps lower, slightly outperforming the rally in 10-year and flattening 10s/20s by 0.25bp to 44.75bps.