Good Digestion of 30-year Supply

30-year supply sees relatively good digestion as the low price beats dealer expectations (which stood at 91.8, per the BBG poll). The cover ratio at 3.504x also ticked up versus 3.027x at last month’s auction to its highest level since Jan’22. The auction tail was also significantly shorter than the past auction. Indeed, it was the shortest tail since Feb’22.

• It appears the allure of the highest outright yield and steepest curve since January were able to facilitate a successful takedown of this month's 30-year auction.
• Despite today's auction occurring in the wake of the BoJ’s recent adjustment of yield curve control for enhanced flexibility, this development did not noticeably impact the outcomes. The consensus revealed in yesterday's BoJ Summary of Opinions, indicating that a more flexible YCC would facilitate ongoing monetary easing, might have alleviated investors' apprehensions.
• JGBs futures have initially gapped higher into positive territory, +5 compared to settlement levels, for the first time today in afternoon trade.
• The 30-year JGB initially richened 1-2bp in post-auction trade.