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JGBS AUCTION: 20-Year Supply Faces A Cyclical High Yield But A Flatter Curve

JGBS AUCTION
BulletAPACFixed Income BulletsJapanMarkets

The Japanese Ministry of Finance (MoF) will today sell Y1.0tn of 20-Year JGBs. 

  • Today’s 20-year JGB auction offers an outright yield at a cycle high, approximately 5bps above last month’s level.  
  • However, the 10/20 yield curve has flattened over the past month, reaching its lowest point since mid-2023. Additionally, the 20-year JGB is now at its most expensive valuation within the 10/20/30 butterfly since late 2022.
  • On the other hand, the auction comes amid improving sentiment toward long-term global bonds.
  • Given these dynamics, it remains to be seen whether today’s supply can sustain positive momentum for JGB auctions or if market caution will weigh on demand.
  • Results are due at 0335 GMT / 1235 JT.
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The Japanese Ministry of Finance (MoF) will today sell Y1.0tn of 20-Year JGBs. 

  • Today’s 20-year JGB auction offers an outright yield at a cycle high, approximately 5bps above last month’s level.  
  • However, the 10/20 yield curve has flattened over the past month, reaching its lowest point since mid-2023. Additionally, the 20-year JGB is now at its most expensive valuation within the 10/20/30 butterfly since late 2022.
  • On the other hand, the auction comes amid improving sentiment toward long-term global bonds.
  • Given these dynamics, it remains to be seen whether today’s supply can sustain positive momentum for JGB auctions or if market caution will weigh on demand.
  • Results are due at 0335 GMT / 1235 JT.