AUCTION: 30-Year JGB Supply Due

The Japanese MOF will today sell Y900bn of 30-Year JGB's re-opening JB#70. The MOF last sold 30-Year debt on May 13, the auction drew cover of 3.117x at an average yield of 0.645%, average price of 101.36, high yield of 0.649%, low price of 101.25, with 67.9449% of bids allotted at the high yield.

• Today's auction comes in the wake of last week's less than inspiring round of 10-Year supply.
• 30s have been on a steady cheapening path since late April, but still sit ~7.5bp shy of their YtD cheaps.
• The 5-/30-Year yield spread sits ~5.0bp or so off the recent steeps, while the 20/-30/40-Year butterfly sits within a handful of bp of the '21 wides, which may lead to some using the auction to enter relative value plays.
• 30-Year swap spreads sit around the middle of their YtD range and operate comfortably off of their '20 tights.
• A less attractive carry & roll profile than both 10s and 20s may limit broader takedown at today's auction. While worries surrounding the potential announcement of a supplementary budget later in '21 may also prove to be a deterrent.
• Results due at 0435BST/1235JST.