Japanese Yen (Jpy)
Today’s $15bn Jan31 TIPS auction was but a little molehill for bullish inflationistas who continued to chase BEs higher this session.
Slightly disappointing domestic trade data has promoted slightly better receiving in long-dated JPY swaps, despite a rally in equities.
BEs extended on the reflation rally of 2021 as the presidential baton was passed amid a buoyant risk-tone. Attention shifts to the 10y TIPS auction.
Wide JPY-USD spread has deterred strong receiving interest in 10y JPY swaps. Players are on a wait-and-see mode about the steepening in 10s/20s.
The 30y JPY swap spread has traded to its richest level in over 6 months. There has been speculation about the BOJ widening its 10y YCC target band.
The JPY rates market saw a selloff, and longer-dated swaps have been bid. Market participants believe the JPY rates curve to steepen further.
TIPS modestly outperformed nominals despite a risk-off tone today but traders are not reading much into it given thin conditions this session.
Weak US jobs data has backed receiving interest in 10-year JPY swaps. 30-year, however, saw light paying.
Powell’s dovish comments today helped propel BEs higher. Barclays reviews import prices.10y TIPS are announced. Tradeweb sees swap volumes rise.
Trading in swaps has been around the longer-end, with mostly 2-way interest in the 10- to 20-year zone. 10s/30s swaps are steeper.