JPY Swaps: Long-end flatter; Domestic data awaited

Steep 5 Jun 2020
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The underperformance in 10-year JPY swaps saw a flatter 10s/20s. Traders have been waiting cautious key domestic data before the next BOJ meeting.

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  • Long-end flatter; Data and BOJ awaited

  • New issues – SMFG perpetuals

 

Click here for SDR JPY IRS trades

 

Long-end flatter; Data and BOJ awaited

JGB future opened firmer and was up by 9-ticks soon after market open. Such momentum had failed to sustain as hawkish comments from the ECB in overnight trading then prompted selling interest.

 

On Tuesday, ECB Chief said another rate hike would be appropriate. Strong China GDP data has also continued to take effect in the rates market.

 

In mid-afternoon Tokyo trading the lead bond future was down 4-ticks at 147.4, and the yield on the benchmark 10-year JGB was up half a basis point at 0.473%.

 

Trading in swaps remained cautious ahead of the first monetary policy meeting chaired by the new BOJ Governor at the end of this month. Prior to this, domestic inflation and trade data which will be out later this week, and jobs and retail sales to be released next week, will be key for traders to decide how to adjust their positions, according to a dealer. Consensus is to see a slower inflation and a wider trade deficit in March, which will support the case for an extended period of ultra-loose monetary policy. The source noticed price action in 10-year that took the swap rate there 0.75bp higher of 0.6675% intraday before being marked just marginally higher than previous close at time of writing. 10s/20s swaps flattened out by a basis point to 37.5bps as the superlong-end has been slightly outperforming 10-year on the selloff.

 

 

New issues – SMFG perpetuals

  • Yamaha Motor Co raised JPY20bn via selling bonds in two equal tranches as follows:

     

    • 0.32%, April 24, 2026.

    • 0.529%, April 25, 2028.

     

  • Sumitomo Mitsui Financial Group Inc raised JPY140bn via selling the following perpetual bonds at JGBs + 171bps:

     

    • JPY51bn, 2.18% with semi-annual call at par from June 2033.

    • JPY89bn, 1.879% with semi-annual call at par from June 2028.

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