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40-Year Cover Softens As Volatility & Worry Outweighs Any Value Prop

JGBS

Nothing in the way of immediate, meaningful reaction in super-long JGBs as the high yield witnessed at the latest round of 40-Year JGB supply matched wider expectations (as proxied by the BBG dealer poll).

  • The cover ratio seen at the auction fell back towards the lows seen at March’s 40-Year auction.
  • It would seem that ongoing market volatility and fear surrounding a potential continued sell off dominated any outright or relative value propositions, limiting demand, as we suggested may be the case ahead of the auction.
  • Note that 40-Year JGBs don’t seem to have traded during the early rounds of the Tokyo afternoon session.
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Nothing in the way of immediate, meaningful reaction in super-long JGBs as the high yield witnessed at the latest round of 40-Year JGB supply matched wider expectations (as proxied by the BBG dealer poll).

  • The cover ratio seen at the auction fell back towards the lows seen at March’s 40-Year auction.
  • It would seem that ongoing market volatility and fear surrounding a potential continued sell off dominated any outright or relative value propositions, limiting demand, as we suggested may be the case ahead of the auction.
  • Note that 40-Year JGBs don’t seem to have traded during the early rounds of the Tokyo afternoon session.