Firm Pricing At Latest Liquidity Enhancement Auction, Even As Cover Moderates

The latest liquidity enhancement auction covering off-the-run 5- to 15.5-Year JGBs sees spreads print comfortably through prevailing market levels, although the cover ratio moderated a touch. This suggests that those that needed access to the line (maybe with short covering requirements) were willing to “pay up” to guarantee their access, while the recent richening left other prospective bidders on the sidelines. JGB futures are incrementally above late morning levels, although that is just as much to do with the bid in U.S. Tsys as anything else, while wider cash JGB trade doesn’t see much movement when it comes to prevailing levels observed across the major benchmarks.