JPY Swaps: 10s/20s flatter despite 10y offers

Flat salt plane 21 Jun 2021
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10y JPY swaps saw some early and light receiving. China inflation data has supported a rally in the JPY rates market.

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  • 10s/20s flatter despite 10y offers

  • New issues

 

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10s/20s flatter despite 10y offers

JGB future rallied today, outperforming the move in the USD rates market in overnight trading, as weak China data has prompted better demand for safe-haven assets.

 

Official data released earlier today showed that inflation in China shrank in the 12 months to July, or the first such contraction in nearly two years. Producer price index (PPI) also fell for a tenth straight month. It was down 4.4% year-on-year, compared to economists’ forecast of 4% of contraction.

 

In early-afternoon Tokyo trading JGB future was up 26-ticks at 146.98. The yield on the benchmark 10-year JGB was down 1.5bps at 0.59%, the lowest since early last week.

 

In swaps there was some US-induced receiving in 10-year in the morning at 1.25bps lower of 0.75%. Such interest faded even after China data as players were more concerned about the US inflation data.

 

10s/20s swaps flattened out by 1.25bps to 43.75bps amid stronger price action in 20-year.

 

 

New issues

  • Akita Prefecture priced JPY5bn in 0.892%, August 25, 2043 bonds at JGBs + 28bps.

     

  • JHF sold the following bonds:

    • JPY16bn, 1.156%, August 20, 2038 at JGBs + 17bps.

    • JPY19bn, 1.313%, August 20, 2043 at JGBs + 6bps.

     

  • Sumitomo Mitsui Auto Service Co Ltd raised JPY20bn in two equal tranches as follows:

     

    • 0.350%, August 25, 2026.

    • 0.569%, August 25, 2028 at JGBs + 35bps.

     

  • Tokyo Metropolitan Government issued JPY20bn in 0.739%, June 20, 2033 bonds. Priced at JGBs + 15bps.

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