JPY Swaps: 10-20y flow; Ueda hints no YCC tweak

BOJ side
BOJ Governor Ueda hinted today that there would be no YCC tweak when the board meets this week. There has been some light 10-20y flow.

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  • Ueda hints no YCC tweak

  • 10-20y flow ahead of BOJ

  • New issues


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Ueda hints no YCC tweak

JGB future has followed the USD rates market weaker, falling by 19-ticks soon after market open before trimming losses in later trading after comments from BOJ Governor Ueda.


Ueda spoke in parliament earlier today and said he expected CPI (excluding energy) to slow down soon, and that the central bank must keep its monetary easing if the underlying inflation hits below 2%. However, he refrained from detailing how to tweak YCC as it would confuse the market. His comments suggested that the BOJ would keep its ultra-loose monetary policy for now, and that it would be make any changes to the YCC when the board meets later this week. This has driven some demand for JPY rates which took JGB future 2-ticks higher intraday before being marked unchanged at 147.71 at time of writing. The yield on the benchmark 10-year JGB was marginally lower at 0.465%.



10-20y flow ahead of BOJ

The yen weakened against the USD after the comments and the pair rose to near 134.5, compared to those traded down to 133.7 in domestic trading on Friday. The superlong-end, however, saw no clear paying although the market anticipates some currency-induced rally in the Nikkei to come. Indeed, a swapper noticed receiving in 20-year in a tight range around 1.04%, or about a basis point lower than previous close.


10-year traded down to below 0.64% in the morning although the majority of the flow has been in a tight range around flat to a touch lower of 0.64-0.645%. 2s/10s swaps flattened out by 0.25bp to 55.5bps.



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