JPY Swaps: 7s/10s JGBs seen flatter; 10s/30s steeper

Flat as a pancake
The rally in the underlying JGBs saw light 10y offers. 30y was bid before next week's auction. BNPP sees flatter 7s/10s JGBs to come.

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  • 10s/30s steeper as 30y bid before auction; Light 10y offers

  • 7s/10s JGBs seen flatter - BNPP

  • New issues – CA Samurais; PayPal yen bonds


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10s/30s steeper as 30y bid before auction; Light 10y offers

The JPY rates market has followed the USD rates market firmer, with stronger rally in the morning session when JGB future was up by 20-ticks. The momentum eased in late-morning domestic trading and the lead bond future finally closed the day only 8-ticks higher of 148.82, marking its fourth consecutive day of gains. The yield on the benchmark 10-year JGB was down from 0.418% to 0.411%.


Players were in a wait-and-see mode ahead of the key US jobs data and before the weekend. A dealer reported some sporadic though decent-sized receiving in 10-year at down to 0.575% on the day, although the majority of the flow was between 0.58% and 0.585%.


Elsewhere, the sharp rally in the Nikkei prompted some paying in 30-year in the morning session when it traded up to around 0.75bp higher. One trader attributed the paying interest in 30-year to be related to players preparing for the 30-year JGB auction next week. It was however last seen changing hands little changed of 1.0525%.


10s/30s swaps steepened up by 1.5bps to 47.25bps.



7s/10s JGBs seen flatter - BNPP

BNP Paribas looked at recent move in the JGB curve in a strategy piece released on Thursday and identified some new opportunities ahead of the BOJ’s June MPM.


The team noticed recent steepening of the 7s/10s JGB slope to its historical high of 20bps “as previous attempts to position for BoJ YCC change have failed and 7s/10s has bull-steepened more than it has flattened in anticipation”. BNP attributed part of the stubborn steepening to the absence of a May MPM for traders to position for.


However, with this month’s MPM coming up, strategists from BNP believe that some investors should be willing to position for a policy rate change, or a change in communication.


At the same time, the team noticed that shorting 10-year JGB would be a costly business, and so it preferred shorting futures. BNP therefore recommended a JGB 7s10s flattener (JB370 vs. JBM3) with target entry at 20bps and target profit at 16bps.



New issues – CA Samurais; PayPal yen bonds

  • AGC Inc sold JPY30bn in 0.790%, June 08, 2033 bonds via MUMSS and Nomura.


  • Aichi Prefecture priced JPY20bn in 1.101%, June 12, 2043 bonds at JGBs + 8bps.


  • Chiba City issued JPY10bn in 1.101%, June 23, 2043 bonds. Priced at JGBs + 8bps.


  • Chiba Prefecture sold JPY20bn in 0.666%, June 24, 2033 bonds at JGBs + 25bps.


  • Cred Agricole SA raised JPY157.8bn via selling the following Samurai bonds:


    • JPY14.5bn, June 11, 2027 4NC3 paying 1.042% till the call, then 92bps over MS.

    • JPY27bn, June 13, 2029 6NC5 paying 1.29% till the call, then 105bps over MS.

    • JPY9.5bn, June 13, 2033 10NC5 paying 2.04% till the call, then 180bps over MS.

    • JPY41.5bn, 0.622%, June 12, 2026 at 50bps over MS.

    • JPY56.1bn 0.850%, June 13, 2028 at 61bps over MS.

    • JPY9.2bn 1.233%, June 13, 2033 at 65bps over MS.


  • Fukuoka Prefecture sold JPY60bn worth of bonds in two equal tranches as follows:


    • 0.215%, June 13, 2028 at JGBs + 13bps.

    • 0.656%, June 13, 2033 at JGBs + 25bps.


  • Gunma Prefecture issued JPY36bn worth of bonds as follows:


    • JPY10bn, 1.101%, June 19, 2043 at JGBs + 8bps.

    • JPY13bn, 0.215%, June 20, 2028 at JGBs + 13bps.

    • JPY13bn, 0.656%, June 20, 2033 at JGBs + 25bps.


  • Hyogo Prefecture priced JPY20bn in 1.101%, June 19, 2043 bonds at JGBs + 8bps.


  • Kobe Steel Ltd raised JPY20bn via selling the following bonds:


    • JPY12bn, 0.545%, June 08, 202 at JGBs + 46bps.

    • JPY8bn, 1.000%, June 08, 2033.


  • Kyoto Prefecture sold JPY20bn worth of bonds in two equal tranches as follows:


    • 0.220%, June 16, 2028 at JGBs + 13bps.

    • 0.666%, June 16, 2033 at JGBs + 25bps.


  • Nagoya City priced JPY10bn in 0.656%, June 20, 2033 bonds at JGBs + 25bps.


  • Okinawa Electric Power issued JPY10bn in 0.365%, June 23, 2028 bonds at JGBs + 28bps.


  • Paypal Holdings Inc sold JPY90bn worth of Reg S global yen bonds as follows:


    • JPY30bn, June 9, 2025 at MS+75bps.

    • JPY23bn, June 9, 2026 at MS+85bps.

    • JPY37bn, June 9, 2028 at MS+100bps.


  • Sapporo City priced JPY10bn in 0.220%, June 20, 2028 bonds at JGBs + 13bps.


  • Shikoku Electric Power sold JPY12.5bn in 0.300%, June 25, 2026 bonds.


  • Shizuoka Prefecture issued JPY40bn in 0.215%, June 20, 2028 bonds. Priced at JGBs + 13bps.


  • Topcon Corp raised JPY20bn via selling bonds in two equal tranches as follows:


    • 0.410%, June 08, 2026.

    • 0.485%, June 08, 2028 at JGBs + 40bps.


  • YKK Corp sold JPY20bn in 0.355%, June 15, 2028 bonds at JGBs + 27bps.