10-Year JGB Supply Goes Smoothly, Even As Cover Eases A Little

A quick look at the breakdown of the latest 10-Year JGB auction reveals a slightly higher than expected low price (the BBG dealer poll looked for a low price of 99.22), while the cover ratio eased from the multi-month high witnessed at January’s auction. The cover ratio printed just above the 6-auction average (3.15x). Meanwhile, the price tail held tight. The supply was ultimately absorbed smoothly, with the cover ratio perhaps hampered by worries re: further cheapening in the international bond space & speculation re: tweaks to the BoJ’s YCC scheme. Still, several relative value plays (identified pre-auction) likely helped when it came to the smooth digestion.

• JGBs have seen a modest bid post-supply, supported as much by the broader bid in core FI markets as the smooth passage of supply.