JPY Swaps: Further JGB losses after RBA; 10s/20s flatter

Chart red numbers 13 Jun 2022
The JPY rates market was sold off further after the surprising RBA. Long swaps were bid briefly as players were cautious ahead of the FOMC.

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  • JGB future falls further after RBA surprise; 10s/20s flatter


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JGB future falls further after RBA surprise; 10s/20s flatter

JGB future was a few ticks lower in the morning session, as it tracked the move in the USD rates market in overnight trading. The selloff deepened in the afternoon following the shock from the central bank in Australia.


After a brief pause in April, the RBA shocked the market by hiking the benchmark interest rate by 25bps to its 11-year high of 3.85% as it concluded this month’s monetary policy meeting earlier today. The central bank supported its own decision by saying that inflation in the country is moderating but still too high while the labour market is still tight, and that further tightening might be needed. Prior to the meeting, most market players had forecast it to pause again especially after a faster-than-expected cooling of inflation in March.


The lead bond future was down by 20-ticks intraday, and the yield on the benchmark 10-year JGB was 2bps higher at 0.42%.


Trading remained subdued as the Japanese market will begin the extended long weekend from tomorrow. Market participants prefer not to take the risk of entering any fresh positions ahead of the FOMC decision and US monthly jobs data, which will be released while the market is still closed. A dealer noticed brief paying in 10-year at 8.5bps higher before last seen changing hands 2bps higher of 0.605%. 20-year traded around 3bps higher of 1.05% after lunch break. 10s/20s swaps flattened out by 0.5bp to 38.75bps.