Free Trial

PEVIEW: 20-Year JGB Supply Due


The Japanese MOF will today sell Y1.2tn of 20-Year JGBs opening JB#182. The MOF last sold 20-Year debt on September 15, the auction drew cover of 2.506x at an average yield of 0.894%, average price of 100.09, high yield of 0.945%, low price of 99.25, with 96.6666% of bids allotted at the high yield.

  • This auction comes on the heels of last month’s poorly received 20-Year offering.
  • Outright 20-Year yields have registered fresh cycle highs during this morning’s Tokyo session, which is a positive in isolation (and reflects some pre-auction concession), although ongoing market volatility, inflationary worry and the lack of relative BoJ control over this zone of the yield curve present some headwinds to supply.
  • We also not that the 10-/20-/30-Year butterfly trades at cycle cheaps, although this could be indicative of weaker structural demand for this zone of the curve, even as 20s offer the most attractive carry and roll proposition on the curve at present (vol. negates a chunk of the carry appeal).
  • A reminder that domestic life insurers and pension funds have indicated a willingness to take on added super-long JGB exposure given the ongoing global market volatility and elevated FX hedging costs.
  • Once again, the strength of this auction will ultimately depend on the headwinds from ongoing market volatility vs. appetite of domestic life insurers and pension funds.
  • Results due at 0435BST/1235JST.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.