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JGBS: Cheaper At Lunch Ahead Of 40Y Supply

JGBS
BulletAPACFixed Income BulletsJapanMarkets

At the lunch break, JGB futures are holding weaker, -11 compared to settlement levels, on a data-light Tokyo session.

  • The results of the 40-year auction are due shortly.
  • The previous auction of 40-year JGBs encountered a solid reception, with the actual high yield undershooting dealer expectations. As per the BBG poll, the anticipated yield was projected at 2.35% versus the realised yield of 2.34%.
  • Moreover, the cover ratio was higher at 2.5798x versus 2.200x observed at the prior auction.
  • A significantly steeper 20/40 yield curve, near the steepest for the past 12 months, appeared to be a supportive factor.
  • The current 40-year auction yield is approximately 30bps higher than the previous outing, with the 20/40 yield curve slightly steeper and near the steepest for the past 12 months.
  • Cash US tsys are flat to 2bps richer, with a steepening bias in today’s Asia-Pac session.
  • Cash JGBs are flat to 1bp cheaper across benchmarks beyond the 1-year. The benchmark 40-year yield is 1.4bps higher at 2.634%% ahead of today’s supply.
  • Swap rates are 1bp lower to 1bp higher, with the belly outperforming. 
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At the lunch break, JGB futures are holding weaker, -11 compared to settlement levels, on a data-light Tokyo session.

  • The results of the 40-year auction are due shortly.
  • The previous auction of 40-year JGBs encountered a solid reception, with the actual high yield undershooting dealer expectations. As per the BBG poll, the anticipated yield was projected at 2.35% versus the realised yield of 2.34%.
  • Moreover, the cover ratio was higher at 2.5798x versus 2.200x observed at the prior auction.
  • A significantly steeper 20/40 yield curve, near the steepest for the past 12 months, appeared to be a supportive factor.
  • The current 40-year auction yield is approximately 30bps higher than the previous outing, with the 20/40 yield curve slightly steeper and near the steepest for the past 12 months.
  • Cash US tsys are flat to 2bps richer, with a steepening bias in today’s Asia-Pac session.
  • Cash JGBs are flat to 1bp cheaper across benchmarks beyond the 1-year. The benchmark 40-year yield is 1.4bps higher at 2.634%% ahead of today’s supply.
  • Swap rates are 1bp lower to 1bp higher, with the belly outperforming.