Mixed Results For Today’s 2Y Supply

The 2-year bond supply has demonstrated mixed demand metrics, as the low price failed to meet dealer expectations, which had been projected at 100.03, as per the BBG poll, and the cover ratio declined to 3.617x from 3.742x in January. However, it was the second-highest cover ratio for a 2-year auction since July last year and the auction tail was unchanged from last month.

• Considering that today's auction took place with an outright yield at its highest level since 2011, the result is likely to confirm the impact that uncertainties surrounding the BoJ policy outcome is having on demand.
• To that end, it is also important to note that today’s auction took place in the aftermath of relatively hawkish comments from BoJ Board Member Takata.
• (Bloomberg) -- Bank of Japan Board Member Hajime Takata sent a strong signal that the case for ending the negative interest rate policy is gaining momentum, comments that pushed the yen and government bond yields higher. (See link)
• There has so far been a slight negative reaction in the cash yield in post-auction trade. JGB futures are holding near session lows in early afternoon trading.