JPY Swaps: More long-end flows; Steeper from 10y

Steep 5 Jun 2020
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Long-dated JPY swaps saw further receiving, and the curve steepened up from 10y as 10y has been outperforming the superlong-end on the rally.

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  • JGB rallies more after lunch break

  • More long-end flow; Steeper from 10y as 10y outperforms

  • New issues

 

Click here for SDR JPY IRS trades

 

JGB rallies more after lunch break

JGB future opened firmer, tracking the gains in the USD rates market on Thursday.

 

In overnight trading, most of the US treasury yields were lower following strong demand at the 30-year UST auction. The rally in the US rates market was also prompted by bigger-than-expected initial jobless claims data and weaker-than-expected PPI data.

 

The lead bond futures rallied further after lunch break and it was up by 35-ticks in mid-afternoon Tokyo trading before being marked 15-ticks higher at 148.99 at time of writing. The yield on the benchmark 10-year JGB was down a basis point at 0.383%.

 

 

More long-end flow; Steeper from 10y as 10y outperforms

Trading in swaps has been mostly from the 10-year point again. The mood was still cautious ahead of several key domestic economic data next week.

 

A trader noticed 10-year offers at down to 3bps lower of 0.525% around mid-day, after trades between 0.5475% and 0.5525% in early morning domestic trading.

 

Offered-side flow in 20-year, on the other hands, saw trades at down to below 0.91% after lunch break. This compared to yesterday’s close of around 0.93%.

 

10-year has been outperforming the superlong-end on the rally, driving a steepening from the 10-year point. 10s/20s and 10s/30s swaps steepened up by 1bp and 1.75bps to 38.75bps and 46.25bps respectively.

                                  

 

New issues

  • Central Nippon Expressway priced JPY100bn in 0.385%, May 18, 2028 bonds. Priced at JGBs + 28.5bps.

     

  • Hokkaido Prefecture issued JPY10bn in 0.245%, May 31, 2028 bonds at JGBs + 14.5bps.

     

  • JFM raised JPY46bn via selling the following bonds:

     

    • JPY21bn, 1.332%, May 28, 2053 at JGBs + 10bps.

    • JPY35bn, 0.677%, May 27, 2033 at JGBs + 29bps.

     

  • Kawasaki City issued JPY10bn in 0.240%, March 17, 2028 bonds. Priced at JGBs + 14bps.

     

  • Kyoto City sold JPY10bn in 0.245%, May 23, 2028 bonds at JGBs + 14.5bps.

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