10-Year JGB Supply Goes Very Well
A very well received 10-Year JGB auction sees the tail vanish and low price marginally top wider dealer expectations (which stood at 99.51 per the BBG dealer poll). Meanwhile, the cover ratio moved to the highest level observed at a 10-Year JGB auction since the early 2000s.
- It would seem that participants are willing to lean on the BoJ’s forward guidance and YCC settings here, with the auction clearing at the upper boundary (in yield terms) permitted under the BoJ’s YCC,.
- Short covering was another potential driver of demand, as we flagged pre-auction.
- Futures hold around the top of their session range post-auction, while cash 10s richen at the margin.