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40-year Supply Absorbed, Cover Ratio Lower

JGBS

The supply of 40-year bonds was successfully absorbed by the market, with the high yield coming in below dealer expectations, which had anticipated a yield of 1.39% according to the BBG poll.

  • However, the cover ratio, which indicates demand, declined to 2.377x compared to 2.694x at the late-March auction. Nevertheless, it is worth noting that the cover ratio for this auction was still the highest since July 2022.
  • Our auction preview suggested that the overall flattening and richening of the yield curve might have reduced demand relative to the late March auction.
  • Despite this, the 40-year bonds remained relatively stable in early afternoon trading, reflecting a positive response to the auction outcome.

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