30-Year Supply Well Received, Lack Of Relative Value Caps Wider Appeal

A fairly well-received round of 30-Year JGB supply sees the low price print a little above wider expectations (which stood at 98.80, per the BBG dealer poll), while the price tail narrowed vs. what was seen at the prior auction and the cover ratio held steady, printing pretty much bang on the 6-auction average.

• The allure of new paper, outright yield levels and continued volatility observed in core global FI markets alongside still elevated FX-hedged yield costs, coupled with seasonal factors surrounding life insurer capital deployment, likely promoted the solid underwriting of the auction.
• Meanwhile, the richness vs. surrounding benchmarks that we outlined pre supply (with 30s operating just off the recently registered richest levels of the cycle on the 20-/30/-40-Year butterfly) likely limited overall demand.
• Futures operate at pre-auction levels, while 30s are just over 1bp firmer vs. levels that prevailed ahead of the lunch break in Tokyo in outright terms, and have richened on the aforementioned fly structure post-auction.