Cover Jumps At 10-Year JGB Supply

The latest 10-Year JGB auction sees softer than expected pricing, with the low price missing wider expectations, coming in at 99.53 (the BBG dealer poll looked for a low price of 99.56). Still, the cover ratio jumped to the highest level observed at a 10-Year JGB auction since the first half of the ‘00s, while the price tail experienced some incremental narrowing. It would seem that short cover and the BoJ’s reinforcement of its existing YCC settings outweighed any worry surrounding relative value appeal. Still, wider price action in core FI markets is dictating price action in JGBs, with futures and cash JGBs marginally softer after the Tokyo lunch break.