20s See Wider Tail & Lower Cover As Market Functioning Issues Limit Demand

The latest round of 20-Year JGB supply saw the low price print a little below wider expectations (which stood at 98.15, per the BBG dealer poll), while the cover ratio softened to sit roughly in line with the 6-auction average, as the price tail widened. Note that the previously outlined factors that were centred on the well-documented impaired JGB market functioning made a strong auction very unlikely, although short cover and potential lifer demand likely provided at least some offset to these headwinds. 20-Year yields are little changed post-supply, while JGB futures operate around pre-auction levels after nudging higher in early afternoon dealing.