Japanese Yen (Jpy)
BEs nudged a little higher with a strong PPI providing a green light against an inflation-friendly/neutral backdrop. CPI is now on the horizon.
10-year JPY swaps have been outperforming their underlying JGBs, and swap spread there is tighter. The curve is flatter from the 10y point.
Today’s Fed TIPS purchase helped support front-end BEs but the bull flattening nominal rally weighed on longer tenors.
JPY rates market is lacking a clear direction today. 5-year saw some pre-auction paying, while 20-year has been slightly better bid.
BEs snapped back higher today after yesterday’s flow-driven hiccup. Inflationistas eye tomorrow’s Fed TIPS purchase operation.
Trading in swaps has not been overly active at the beginning of the new fiscal year. 2-10y saw paying and the superlong-end has been better offered.
Superlong JGBs are seen outperforming in a rangebound environment. An extension in the richening trend could push the 20y swap spread back to zero.
BEs sellers emerge today as an energy rally lost much of its upward momentum intraday while nominal yields ground lower in the backdrop.
There has been trade in ultralong JPY swaps while 20-30 year spreads have edged up. The newest BOJ board member won't push for more easing.
The rally in US treasuries saw receiving interest in 10-20y JPY swaps. The front-end saw price action due to the FX move. 2s/10s flattened out.