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Japanese Yen (Jpy)

There has been trade in the belly of the JPY swap curve after 5-6y swap rates dipped below zero. Downside risks are expected to keep the BOJ on hold.

BEs bear steepened as fears of spreading coronavirus soured the risk tone.

JPY clearing basis is continuing to decline and the 30y spread has dropped back into negative territory for the first time in a month.

China’s coronavirus infected the risk tone today, muddying up the prospects for today’s 10y TIPS auction

JPY IRS clearing basis has narrowed on a mild bias for foreign receiving since the BOJ upgraded its official growth forecasts earlier this week.

BEs bear steepened as the energy complex faltered. Attention now turns to tomorrow’s $14bn 10y TIPS auction which Barclays previews.

The belly of the JPY swap curve has been in focus today. The BOJ is unlikely to change policy near-term. The IMF has upgraded its Japanese outlook.

JPY swap rates have dropped after the BOJ left its policy settings unchanged this afternoon but lowered its inflation forecasts slightly.

There has been trade in short JPY curve spreads as the market expects a BOJ growth outlook upgrade tomorrow.

Early session strength in inflation was summarily rejected as better sellers pounced on the markets, leaving BEs mixed but little changed.

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