Halister News

(Bloomberg) -- Prospects for fiscal measures and a delay in sales-tax hike in Japan may negatively impact its credit rating, leading to higher funding costs in foreign currencies for Japanese companies, says Tomohisa Fujiki at BNP Paribas.

• This may be reflected by today’s drop in USD/JPY’s 3-mo. basis swaps to -45.375 bps from -43.000 bps on May 13, says Fujiki, Tokyo-based chief rates strategist, in an interview; adds speculation of fiscal package and postponement in sales-tax increase and some other factors are exerting more steepening pressure on yield curve in a textbook-based reaction, weighing on super-long tenors
• Tomorrow’s 5-year JGB auction could go smoothly amid expectations of further BOJ easing: Fujiki; says entering a long 5-year ASW (buying cash JGBs vs paying IRS) position in the short-term looks attractive
• NOTE: Japanese PM Abe says fiscal measures may be needed to create demand; Abe has decided to postpone sales-tax increase, Nikkei reported
• JGB 10-year yield up 0.5 bp at -0.110%, 30-year yield up 1 bp at 0.360%