5-Year Supply Shows Mixed Results

Today's supply of 5-year bonds shows mixed results. The auction's low price met dealer expectations, which had been projected at 99.92 as per the BBG poll, but the cover ratio of 3.435x was lower than the 3.788x recorded at January’s auction. This is the second consecutive monthly decline in cover.

• The tail held at last month’s length, which sits in the middle of the range for the past year.
• As indicated in our preview, the current 5-year auction was occurring with an outright yield that was 10-15bps higher than January’s offering. The 2/5 curve was around 5bps steeper than at the January auction.
• Overall, today’s result is likely to be seen as a disappointing after solid demand metrics seen at February’s 10- and 30-year JGB supply.
• The 5-year JGB is around 0.5bp cheaper at 0.315% after the auction. JGB futures have gapped lower in early afternoon dealings to a session low of -25 compared to settlement levels.