JPY: Japan FinMin Suzuki Discussed JPY Intervention With U.S. Tsy Sec Yellen: TBS
Japan's Finance Minister Suzuki discussed the possibility of coordinated currency intervention amid the rapid depreciation of the yen, TBS reports citing a Japanese government official.
- Suzuki earlier refused to comment on whether he discussed the idea of a coordinated intervention with his U.S. counterpart, but admitted that they talked about recent abrupt moves in the exchange rate.
- The TBS source said suggested that the U.S. response was positive, despite current inflationary pressures within the U.S.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGBS: Fresh Pressure After The Lunch Break
JGB futures have cheapened during the early rounds of Tokyo afternoon dealing, with the previously outlined uptick in the offer/cover ratio witnessed in today’s 5- to 10-Year BoJ Rinban operations pressuring that zone of the curve (note that the aforementioned offer/cover ratio was by no means elevated). The contract has printed fresh cycle lows and trades just above its worst level, last -16. Weakness in the longer end has also extended, 30s and 40s run ~2.5bp cheaper on the day., with the twist steepening observed during the morning session seeing a light extension, as paper out to 5s trades little changed to 0.5bp richer. 10-Year JGB yields are testing their morning highs and sit within 0.5bp of the level that triggered BoJ fixed rate operations back in in February (0.23%), when the Bank pre-emptively stepped in to reinforce the upper end of its permitted -/+25bp trading band.
JGBS: Curve Twists Steeper
JGB futures failed to breach their overnight cycle low in the Tokyo morning, tracking broader swings in core FI markets, which mainly took their lead from U.S. Tsys. The contract hit the bell 8 ticks below Tuesday’s settlement levels as a result.
- The presence of BoJ Rinban operations supported paper out to 5s, with the benchmarks in that area of the cash JGB curve trading little changed to 0.5bp richer at the break. The overnight cheapening in U.S. Tsys (which has extended a little further in Asia-Pac dealing) provided some impetus further out the curve, with JGB benchmarks in that area running 0.5-2bp cheaper, as 30s lead the way lower, promoting twist steepening.
- Today’s BoJ Rinban operations generated the following offer/cover ratios
- 1- to 3-Year: 1.95x. (prev 2.37x)
- 3- to 5-Year: 2.11x. (prev 1.85x)
- 5- to 10-Year: 2.50x. (prev 1.59x)
- The movement in the cover ratios isn’t particularly significant but could promote some modest twist steepening out to 10s in early afternoon dealing.
- There hasn’t been much in the way of local news flow to digest, outside of the continued speculation in the press surrounding the potential for fresh fiscal support to fight the cost-of-living crisis.
US TSYS: Waiting For Fresh Impetus After TYM2 Support Holds
The previously flagged hold of technical support in TYM2 futures seems to have calmed the market for now, with a lack of fresh fundamental news flow resulting in a calmer couple of hours of Tsy trade. TYM2 is still holding a little above worst levels of the session, -0-10 at 122-14, while cash Tsys sit 2.0-2.5bp cheaper across the curve.
