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40Y Auction Delivers A Poor Result

JGBS

The issuance of 40-year bonds today encountered a tepid reception, with the actual high yield overshooting dealer expectations. As per the BBG poll, the anticipated yield was projected at 2.385% versus the realised yield of 2.42%.

  • The cover ratio was little changed at 2.200x versus 2.21x observed in the late May auction.
  • As highlighted in the auction preview, today's auction followed solid demand metrics at July's 20- and 30-year JGB auctions.
  • Accordingly, today’s result is likely to be deemed poor.
  • The 40-year bond is around 2.5bp cheaper in early afternoon trading, reflecting a negative response to the auction outcome.

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