PREVIEW: 10-Year JGB Supply Due

The Japanese MOF will today sell Y2.6tn of 10-Year JGB's re-opening JB#362. The MOF last sold 10-Year debt on May 11, the auction drew cover of 3.038x at an average yield of 0.072%, average price of 100.27, high yield of 0.074%, low price of 100.25, with 30.3800% of bids allotted at the high yield.

• There appears to be little in the way of worry re: the absorption of today's supply within the sell-side community.
• Limitations re: the broader appeal of the auction may include the fact that 10s sit towards the richer end of the recent range witnessed on the 5-/10-/20-Year butterfly, although that does come after some cheapening in the early part of '21, with that particular structure currently pricing around the middle of the range in play since April '20.
• 10-Year swap spreads have also stuck to the confines of an extremely narrow range in recent months.
• Still, the lower vol. environment, steady BoJ Rinban announcement for June and lack of immediate need for a supplementary budget should mean that the auction passes smoothly enough.
• Result due at 04:35BST/12:35 JST.