Firm Pricing At Latest 2-Year Offering, Although Demand Cools

The latest round of 2-Year JGB supply sees the low price print a little above wider expectations (which stood at 100.12, per the BBG dealer poll), although the cover ratio softened below the 6-auction average as the price tail widened a touch vs. the previous auction (with the auction clearing at lower prevailing yields than the prior offering, which likely deterred bidders). 2s firm by just under 1bp vs. pre-auction auction levels, while benchmark JGB futures look through the event owing to the paper’s location on the curve. All in, the auction once again points to a lack of meaningful capital repatriation flows ahead of the turn of the Japanese FY (as has been evidenced in the weekly international security flow data from the Japanese MoF).