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PREVIEW - 10-Year JGB Auction Due

JGBS AUCTION
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The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-Year JGBs. The MoF last sold 10-year debt on 3 September 2024, the auction drew cover of 3.17x at an average yield of 0.915%, an average price of 101.66, a high yield of 0.925%, a low price of 101.57, with 14.4285% of bids allotted at the high yield.

  • Last month’s auction was well absorbed, with a significantly shorter tail and the cover ratio rising to 3.17x from 2.98x in August.
  • The current 10-year auction is taking place with an outright yield of about 10bps lower than the September auction.
  • However, the 2s/10s yield curve is approximately 5bps flatter than it was in September, nearing its flattest point since July 2023.
  • Additionally, the relative affordability of 10-year JGBs versus futures, as measured by the 7- to 10-year spread, is less attractive than in September, with the spread now sitting around the middle of its range over the past year.
  • However, today’s auction occurs with sentiment towards global long-end bonds near the most favourable level this year.
  • In this context, it will be intriguing to observe whether the current 10-year yield will generate sufficient demand at today’s auction.
  • Results are due at 0435 BST / 1235 JT.
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The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-Year JGBs. The MoF last sold 10-year debt on 3 September 2024, the auction drew cover of 3.17x at an average yield of 0.915%, an average price of 101.66, a high yield of 0.925%, a low price of 101.57, with 14.4285% of bids allotted at the high yield.

  • Last month’s auction was well absorbed, with a significantly shorter tail and the cover ratio rising to 3.17x from 2.98x in August.
  • The current 10-year auction is taking place with an outright yield of about 10bps lower than the September auction.
  • However, the 2s/10s yield curve is approximately 5bps flatter than it was in September, nearing its flattest point since July 2023.
  • Additionally, the relative affordability of 10-year JGBs versus futures, as measured by the 7- to 10-year spread, is less attractive than in September, with the spread now sitting around the middle of its range over the past year.
  • However, today’s auction occurs with sentiment towards global long-end bonds near the most favourable level this year.
  • In this context, it will be intriguing to observe whether the current 10-year yield will generate sufficient demand at today’s auction.
  • Results are due at 0435 BST / 1235 JT.