INDIA: INR Swaps Suggesting Near to End of Easing Cycle
Nov-06 03:21
- With just over a month to go before the next RBI meeting, swaps and bond signals are no longer suggesting that the last meeting for the year will see a cut.
- The swaps market had 25bps of cuts over the next month and 29bps over the next two at the beginning of last week, whilst the MIPR function on Bloomberg has 29 cuts priced in over the next month.
- Today that it remains at -7bps over the next month and -9bps over two with the BBG MIPR function down to -22bps (from -23bps) over the next year.
- The next focus for markets in India will be October CPI out on the 12th, where if forecasts are correct will reach a new low of 0.35% on falling food prices.
- If swaps pricing is correct, that looks likely nearing the end of the tightening cycle with very little priced in over the next 12 months and may suggest that bond yields have room to move higher from here.
- The market pricing is somewhat at odds with the MPC who at their last meeting where rates were maintained at 5.50%, also maintained their neutral stance. The market is likely hinging on the fact that 2 of the 6 members voted for an accommodative stance.
- At the time of the last meeting on Oct 1, USDINR was hovering around the recent new low of 84.07 before a strong rally in recent days where the Rupee gained over 1% to sub 88 driven by RBI interventions, only to give some of that back to be trading at 88.65 today.
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JGBS: Bear-Steepener At Lunch Ahead Of 30Y Supply Results
Oct-07 03:19
At the Tokyo lunch break, JGB futures are weaker, -17 compared to the settlement levels, but off the session’s worst levels.
- “BoJ says 2025 Paris Europlace Forum in Tokyo scheduled for Wed. was called off and Governor Kazuo Ueda’s speech was cancelled as a result.” – BBG
- (Bloomberg) With Sanae Takaichi poised to become Japan’s first female prime minister, economists warn her policies may have mixed results: expansionary measures that spur growth but exacerbate fiscal strain, and coalition partners who temper a more hawkish stance on China amid a push for higher military spending.
- Cash US tsys are flat to 1bp cheaper, with a steepening bias, in today's Asia-Pac session after yesterday's modest sell-off.
- Cash JGBs are 1-4bps cheaper across benchmarks. The benchmark 30-year yield is 4.3bps higher at 3.35% ahead of today's supply.
- Last month’s 30-year bond auction delivered mixed results. The low price matched dealer expectations of 92.80, per the Bloomberg survey. However, the cover ratio fell to 3.31x from 3.43x.and the auction tail lengthened to 0.18 from 0.15, indicating a softening in bidding strength.
- This month’s 30-year JGB auction features an outright yield at a new cycle high of 3.351%, approximately 10bps higher than last month’s issuance.
- Swap rates are flat to 2bps lower, with swap spreads tighter.
JGBS AUCTION: 30Y Supply Faces Higher Yield But Similar Curve
Oct-07 03:11
The Japanese Ministry of Finance (MoF) will today sell Y700bn of 30-Year JGBs. The MoF last sold 30-year debt on 4 September 2025.
- This month’s 30-year JGB auction features an outright yield at a new cycle high of 3.351%, approximately 10bps higher than last month’s issuance.
- The 10s30s yield curve is around the same level as the previous auction and sits at its cycle peak at 165bps.
- On a relative value basis, the 30-year bond is around the same valuation to last month, based on the 20-/30-/40-year butterfly spread. Nevertheless, the 30-year is still holding the dramatic cheapening seen in May. It sits at its most discounted level in over 20 years.
- Investor sentiment toward longer-dated global bonds remains uncertain.
- Against this backdrop, today’s 30-year auction will serve as a real test of investor appetite. Ultra-long maturities remain a soft spot in the market, and their performance will be key in determining whether recent volatility continues.
- Results are due at 0435 BST / 1235 JT.
JGBS AUCTION: Poll: 30-Year JGB Auction
Oct-07 03:07
Japan’s 30-Year Bond Auction May Have 99.15 Cut-off Price: Poll- BLOOMBERG
