Free Trial

40-year Auction Goes Poorly

JGBS

The market's response to the supply of 40-year bonds was disappointing, as the high yield exceeded dealer expectations, which had projected a yield of 1.445% based on the BBG poll.

  • Nevertheless, there was an improvement in the cover ratio, which increased to 2.541x compared to 2.377x during the late-May auction. It's worth noting that the cover ratio observed in late May was the lowest seen at a 40-year auction since November 2022.
  • As flagged in auction preview, the current auction took place with the outright yield and yield curve at similar levels to the previous one in late May. The subdued demand seen today might therefore be a reflection of uncertainty surrounding policy outcomes at the BoJ's policy meeting scheduled for Friday.
  • The 40-year bond is 2bp cheaper in early afternoon trading, reflecting a negative response to the auction outcome. JGB futures are also slightly weaker in post-auction trade.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.