2-Year JGB Supply Due

The Japanese MOF will today sell Y2.8tn of 2-Year JGBs opening JB#439. The MOF last sold 2-Year debt on Jun 28, the auction drew cover of 3.814x at an average yield of -0.049%, average price of 100.109, high yield of -0.044%, and low price of 100.100, with 59.1854% of bids allotted at the high yield.

• The BoJ’s on hold stance is a positive for demand, although the related move away from cycle cheaps and steepness of the JGB curve are negatives.
• Note that offshore investors will look to take advantage of any FX-hedging related yield pickups on offer which will likely provide a baseline level of demand.
• We don’t hold much in the way of strong conviction when it comes to the potential outcome of this auction.
• Results due at 0435BST/1235JST.