JPY Swaps: Long-end flatter as SL outperforms after dovish Kuroda

BOJ Governor 2
SL JPY swaps outperformed 10y after lunch break following dovish comments from Kuroda. Both 10s/20s and 10s/30s flattened out by a few basis points.

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  • JGB future trims losses after dovish Kuroda

  • Long-end flatter as SL turns offered after lunch break

  • MOF sells 40y JGBs

  • New issues


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JGB future trims losses after dovish Kuroda

JGB future plummeted and was down by almost half a point in the morning session, as the news about the US authorities considering to expand an emergency lending facility for banks has relieved worries over the collapse of First Republic Bank. This has eased worries over a chain reaction in the banking sector that might eventually lead to a recession.


The lead bond future trimmed losses after lunch break, as BOJ Governor Kuroda re-iterated that the ongoing massive monetary easing has been appropriate, and that it would be too premature to debate for an exit. This led to expectations that the BOJ would stand pat for longer than the market had expected before the banking turmoil.



Long-end flatter as SL turns offered after lunch break

Trading in JPY swaps remained subdued today with almost only noticeable activities from the 10-year point of the curve.


A dealer reported paying in 10-year there at up to 2.75bps higher of 0.6225% in mid-morning domestic trading. 20- to 30-year swaps were paid up in the morning, but turned offered after mid-day and outperformed the 10-year. 20-year, for example, traded 2.5bps higher in the morning but was offered down 1.5bps at 1.0225%. 30-year traded 3.5bps higher in earlier trading before last seen changing hands 3bps lower of 1.0875%.


10s/20s and 10s/30s swaps were 4bps and 6.26bps flatter at 40.25bps and 46bps respectively.



MOF sells 40y JGBs

Earlier today, the MOF sold JPY699.9bn worth of its JPY700bn 40-year 1% JGBs (Number 15R) at tender. The auction drew bids worth 2.69 times, up from 2.55 times last month. Average yield was 1.465%.