JPY Swaps: 10-15y bid on accelerated inflation; Indonesia and Lloyds Samurais

• Accelerated inflation prompts more JGB future selloff

• 10-15y bid; Steeper to 5y

  li>New issues – Indonesia, Lloyds Samurais

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Accelerated inflation prompts more JGB future selloff

JGB future fell for the second consecutive session, after reaching its recent high on Wednesday. The move was prompted by dumping of safe-haven assets after domestic data, and amid the selloff in the USD rates market in overnight trading.

Official data released earlier today showed that inflation in Japan was 3.5% in April, up from 3.2% in March and matching economists’ expectations. Inflation excluding food and energy was 4.1%, slightly below consensus of 4.2% but still higher than 3.8% in the previous month.

On Thursday, Dallas Federal Reserve Bank President Lorie Logan said she believed that the economic data so far doesn’t support a pause in the central bank’s rate hikes next month, while the usually hawkish member St. Louis Fed President James Bullard told the Financial Times that he supported raising rates higher as ‘insurance’ against inflation. The market shifted to price in about 40% of chance of another US Fed hike in June and thus a selloff in the USD rates market.  

10-15y bid; Steeper to 5y

The selloff in the JGB market has backed paying interest in JPY swaps. 10-year, for example, has been well bid since early morning domestic trading. It traded in a tight range around 0.57% in the morning before flows at up to 0.58% around mid-day. It was however last seen changing hands at unchanged of 0.565%.

15-year saw some light paying too, and went through up to 0.25bp higher of 0.78% before lunch break. 2-year, on the other hand, traded briefly at a basis point higher of 0.945% in mid-morning domestic trading.

At time of writing the swap curve was steeper to 5-year and was pretty much an upward shift of 1-1.5bps beyond that point. 5s/10s was marked a tad steeper at 31.75bps.

New issues – Indonesia, Lloyds Samurais

• Fukuoka Prefecture raised JPY40bn via selling bonds in two equal tranches as follows:

   

  • 0.681%, May 30, 2033 at JGBs + 27bps.

  • 1.093%, May 29, 2043 at JGBs + 9bps.

   

• Hokkaido Electric Power raised JPY35bn via selling the following bonds:

   

  • JPY30bn, 1.030%, May 25, 2033.

  • JPY5bn, 1.550%, May 25, 2043.

   

• Hyogo Prefecture priced JPY20bn in 0.701%, May 30, 2033 bonds at JGBs + 29bps.

   

• Indonesia raised JPY104.8bn via selling the following Samurai bonds:

   

  • JPY14.7bn, 1.200%, May 24, 2030.

  • JPY37.2bn, 0.980%, May 26, 2028.

  • JPY46.9bn, 0.740%, May 26, 2026.

  • JPY6bn, 1.430%, May 26, 2033.

   

• Invincible Investment issued the following bonds:

   

  • JPY1.2bn, 1.200%, May 25, 2028.

  • JPY5bn, 1.000%, May 25, 2026.

   

• Japan Railway priced JPY10bn in 0.701%, May 30, 2033 bonds at JGBs + 29bps.

   

• JEHDR sold JPY75bn in 0.155%, May 31, 2028 bonds.

   

• UK-based Lloyds Bank Group Plc issued JPY62bn in May 25, 2029 Samurai bonds that pay 1.352% till the single call at par in May 2028, then 1.1%.

   

• Shizuoka Prefecture priced JPY10bn in 0.803%, March 20, 2043 bonds at JGBs + 33bps.

   

• Suntory Holdings sold JPY50bn worth of bonds as follows:

   

  • JPY15bn, 0.389%, May 25, 2028 at JGBs + 27bps.

  • JPY35bn, 0.800%, May 25, 2033.
  
   

• Tohoku Electric Power Co issued JPY20bn in 1.600%, May 25, 2045 bonds.

   

• West Nippon Expressway raised JPY220bn via selling the following bonds:

   

  • JPY30bn, 0.050%, May 27, 2024.

  • JPY100bn, 0.116%, May 23, 2025 at JGBs + 18.5bps.

  • JPY90bn, 0.390%, May 25, 2028 at JGBs + 28.5bps.