JPY Swaps: Brief 10y bid; CPI cautiously eyed

Rolled flat 18 Jun 2020
Players have been cautious ahead of the release of national CPI data later this week. 10y saw some brief paying but 2s/10s swaps flattened out a tad.

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  • Brief 10y bid; CPI eyed


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Brief 10y bid; CPI eyed

JGB future was firmer today, catching up the rally in other rates markets when the Japanese market was closed on the previous day. The lead bond future was up by 13-ticks intraday before being marked 9-ticks higher at 147.42 at mid-day. The yield on the benchmark 10-year JGB was up marginally at 0.476%.


Trading in swaps has been subdued as players have been on the sidelines ahead of the national CPI data. A market participant said the slower-than-expected Tokyo inflation in June has not relieved worries about the inflation situation at national level. “The upcoming data print would be key to whether the BOJ would revise its inflation outlook, or to tweak the YCC,” the source explained of the cautious mood in the market today and possibly into the release of the data.


Players have skewed towards a hawkish stance even if the inflation data matches expectations, supporting better paying in 10-year swaps. Another player reported paying in 10-year at up to 2.5bps higher of 0.73% intraday, although it also traded briefly at 0.75bp lower of 0.6975% in early morning domestic trading. At time of writing, it was marked around 0.5bp lower, flattening 2s/10s swaps by 0.75bp to 62.5bps.