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20-Year JGB Supply Goes Well, Aided By Relative Value Strategies?

JGBS

Today's 20-Year JGB auction generated a narrower tail when compared to its predecessor, a higher than expected low price (the BBG dealer poll pointed to a low price of 100.55) and uptick in the cover ratio vs. what was witnessed at the previous round of 20-Year supply (also providing the highest cover ratio witnessed at a 20-Year JGB auction since Oct '20). You would expect that the relative value plays we outlined ahead of the auction provided the bulk of the demand observed. JGB futures firm post-supply, +9 last, with 20s now outperforming on the curve (~1.5bp richer on the day), helping longer dated paper unwind the early underperformance. The 10-/20-/30-Year butterfly has tightened by ~1bp on the day, after hovering multi-month wides in recent sessions.

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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