Adequate Digestion Of 5-Year Supply, Less Demand Seen

Today's supply of 5-year bonds sees adequate demand, with the auction's low price meeting dealer expectations, which had been projected at 99.83 as per the BBG poll. The cover ratio of 4.056x was lower than the 4.415x recorded at the previous month's auction. However, it is worth noting that today's result was the third-highest for a 5-year auction in the past 12 months.

• The tail was unchanged from last month and sits in the middle of the range for the past year.
• As highlighted in our preview, an outright yield that remained close to the highest level this year had the potential to support the reception of today’s auction.
• Today’s result contrasts with 10-year and 30-year supply that saw mixed to poor digestion, which suggested investors were inclined to seek higher yields before significantly increasing allocations to those parts of the JGB curve.
• At the start of the afternoon trading session, JGB futures have weakened slightly from lunch break levels.
• The 5-year JGB is around 1.0bp cheaper at 0.316% after the auction.