JPY Swaps: Light long-end bid; Flatter from 10y

Japan flag and buildings
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Trading in JPY swaps was not overly active ahead of key domestic data. There was paying at the long-end and the curve was flatter from 10y.

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  • Weak JPY backs a selloff in JPY rates

  • Light long-end bid; Flatter from 10y

  • New issues

 

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Weak JPY backs a selloff in JPY rates

JGB future has followed the US market weaker today although it rose by a few ticks briefly at the open. The downtrend was relatively stronger in the afternoon session with the lead bond future down by 14-ticks to 148.42. The move was in part due to expectation about further gains in the Nikkei as USD/JPY made an upside break above 140 in domestic trading and traded up to near 141.

 

In mid-afternoon Tokyo trading JGB future was down 10-ticks at 148.46, and the yield on the benchmark 10-year JGB was up around 1.5bps at 0.427%.

 

 

Light long-end bid; Flatter from 10y

Players were again on a wait-and-see mode today before the outcome of the US debt-ceiling negotiation. Domestic unemployment and retail sales and industrial production data for April is due tomorrow and Wednesday, and these have deterred any strong appetite for new positions too. Currently, the market expects jobless rate to ease from 2.8% in March to 2.7%. Retail sales is expected to show 7.1% worth of growth year-on-year, up from 6.9% in March. Industrial production is forecast to have grown by 1.9% year-on-year after 0.6% of contraction in the previous period.

 

Swap trading has been very subdued with brief trade flow around mid-day. 10-year went through marginally higher of 0.5975%, up from previous close of 0.595%. 20- and 30-year swaps traded 1.75bps and 1.25bps higher of 0.995% and 1.65%. At time of writing 10-year was marked 2.25bps higher, flattening 10s/20s and 10s/30s swaps by 0.5bp and 0.75bp to 38bps and 45.25bps respectively.

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