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

Baseball first base 17 Jan 2023
Dovish US Fed offered comfort to BOJ's ultra-loose policy, supporting demand for JPY rates. Swaps have been offered and the long-end was flatter.

Start a free trial to read this article

Join today to access all  Total Derivatives content and breaking news. Already a subscriber? Please Log In to continue reading.

Or contact our Sales Team to discuss subscription options.

Get in Touch
Blurred image of Total Derivatives article content

  • Dovish US Fed eases pressure on BOJ policy move

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


Click here for SDR JPY IRS trades


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.