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JGBS AUCTION: PREVIEW: 5-Year JGB Auction

JGBS AUCTION

The Japanese Ministry of Finance (MoF) will today sell Y2.3tn of 5-Year JGBs. The MoF last sold 5-year debt on 14 August 2024, with the auction drawing cover of 3.5109x at an average yield of 0.452%, an average price of 99.75, a high yield of 0.463%, a low price of 99.70, with 27.4954% of bids allotted at the high yield.

  • Last month’s supply of 5-year bonds showed poor demand metrics. The auction's low price failed to beat dealer expectations, and the cover ratio declined to 3.5109x from 4.256x at July’s auction. The auction tail was also longer.
  • However, today's auction comes on the heels of a solid 10-year outing in September. The cover ratio increased to 3.17x from 2.975x at August’s auction and the tail collapsed to 0.09 from 0.5 in August.
  • The current outright yield is 5-10bps higher than August’s offering and 15bps lower than late July’s cyclical peak.
  • However, the 2/5 curve sits near the bottom of the range it has traded in since December 2022.
  • Given these developments, it will be interesting to observe whether today's auction will buck the recent trend of weaker demand metrics witnessed in JGB auctions.
  • Results are due at 0435 BST / 1235 JST.
GlobalBulletAPACFixed Income BulletsJapanRegionMarkets
GlobalBulletAPACFixed Income BulletsJapanRegionMarkets

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