Interest Rate Swaps in Japan Slumped to Six-month Low
Three-year interest rate swaps in Japan slumped to a six-month low as the nation’s record earthquake and nuclear crisis depressed the economy more than analysts anticipated.
The fixed rate traders pay to receive floating payments for three years declined to 0.396 percent last week, the lowest level since Nov. 4, and traded at 0.407 percent today. Four-year and five-year equivalents are also at about six-month lows.
“It’s becoming increasingly clear that the Bank of Japan is strengthening its commitment to an accommodative stance,” said Ayako Sera, a strategist in Tokyo at Sumitomo Trust & Banking Co., which manages about $331 billion in investments. “Out of all the central banks right now, it’s easiest to predict the Bank of Japan’s moves. Investors can comfortably assume that short-term rates won’t rise.”
