2-Year Supply Goes Well

2-Year JGB supply passes smoothly, with the tail holding tight and cover ratio still printing above 4.00x. Also note that the low price topped wider dealer expectations, which stood at 100.055, per the BBG dealer poll.

• As we noted ahead of the auction, the BoJ’s on hold stance and the persistent unattractiveness of offshore bonds from the perspective of a Japanese investor, owing to ongoing market volatility and elevated FX hedging costs, likely allowed the auction to go smoothly. Outright yields operating just shy of their cycle peak, hovering within touching distance of the 0% level, also provided a likely source of demand.