JGBS: Futures Off Lows At Lunch But Still Sharply Cheaper
Feb-14 02:42
At the Tokyo lunch break, JGB futures are holding sharply cheaper, -37 compared to settlement levels, but above the session low of 145.75 (-56). With the domestic calendar empty, apart from 10-year climate transition bond supply, local participants have been content to maintain the negative lead-in from US tsys overnight.
- (Bloomberg) -- The world’s first sovereign transition bonds on sale Wednesday in Japan look set to see strong demand due to their novelty despite scepticism among investors abroad about the debt’s environmental credentials. (See link ICYMI)
- (Bloomberg) -- Governor Kazuo Ueda is in a rare sweet spot for Japanese monetary officials as he weighs a historic policy move with virtually no political opposition, in sharp contrast to the experiences of his Bank of Japan predecessors. (See link)
- The cash JGB curve has bear-steepened, with yields 1-4bps higher. The benchmark 10-year yield is 1.7bps higher at 0.745% versus the morning high of 0.772%.
- The BoJ expanded its balance sheet by 0.5% to a record 760 trillion yen in the past 10 days.
- Swaps are mostly cheaper, with rates 1bp lower (20-30-year) to 3bps higher (40-year). Swap spreads are tighter.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JGBS: At Session Highs At Lunch, BoJ Rinban Results Are Due
Jan-15 02:41
At the Tokyo lunch break, JGB futures are richer and at session highs, +30 compared to the settlement levels.
- There hasn’t been much in the way of domestic drivers to flag, outside of the previously outlined M2 & M3 Money Stock data. Machine Tool Orders data is due later.
- The cash JGBs are richer across benchmarks, with yields 1-4bps lower. The benchmark 10-year yield is 4.3bps lower at 0.564%, outperforming the curve. 5-year supply is due tomorrow.
- The 2-year JGB yield is at 0.2% after falling below 0% for the first time since July. The move has been driven by the view that the BoJ is unlikely to tweak its monetary policy at a meeting next week following a powerful earthquake on Jan. 1.
- Japan’s bond market will largely take in its stride any normalisation steps by the central bank this year, according to a former finance ministry official known for his key role in reforming the management of the country’s issuance of debt. (See Bloomberg link)
- The results of the BoJ’s Rinban Operations covering 1-3-year and 5-25-year JGBs are due later.
- Swap rates are slightly lower across maturities, with swap spreads wider.
CNH: USDCNY Fixing Error Term Widens Slightly, 1-yr MLF Rate Unchanged
Jan-15 01:39
USDCNY fixing printed at 7.1084 versus Bloomberg consensus of7.1659, very close to Friday’s level.
- The 1-year MLF was unexpectedly left unchanged at 2.5%, whereas a 10bp cut had been expected. There was a cash injection via the 1-year MLF for the 14th straight month of CNY995bn, down from last month.
- The fixing error term widened moderately to -575pips from -534pips on Friday in USDCNY terms.
- USDCNH trended higher on Friday to 7.193 but has started the week flat at 7.1868. We did dip to 7.1837 earlier and then spiked to 7.1916. Moves since the MLF announcement have been limited.
- On Wednesday there is a swathe of activity data including Q4 GDP, December IP, retail sales and jobless rate. Growth is expected to have picked up in the final month/quarter of 2023 with Q4 GDP forecast at 5.3% y/y and December IP at 4.5% but retail sales slowing to 8%.
JGBS: Bull-Flattening, 2YY Went 0% For First Time Since July
Jan-15 01:30
In Tokyo morning trade, JGB futures are holding richer, +27 compared to settlement levels.
- Today, the local calendar is light with Money Stock M2 & M3 and Machine Tool Orders data as the highlights. M2 & M3 stock rose 2.3% y/y and 1.7% y/y in Dec. The BoJ has also conducted Rinban Operations covering 1-3-year and 5-25-year JGBs. Results are due later.
- The cash JGB curve has bull-flattened, with yields 1-3bps lower. The benchmark 10-year yield is 3.4bps lower at 0.574%. 5-year supply is due tomorrow.
- The 2-year JGB yield fell below 0% for the first time since July driven by the view that the BoJ is unlikely to tweak its monetary policy at a meeting next week following a powerful earthquake on Jan. 1.
- Swap rates are slightly lower across maturities, with swap spreads wider.
