Free Trial

PREVIEW: 10-Year JGB Supply Due

JGBS AUCTION

The Japanese MOF will today sell Y2.6tn of 10-Year JGB's re-opening JB#363. The MOF last sold 10-Year debt on August 3, the auction drew cover of 3.333x at an average yield of 0.009%, average price of 100.89, high yield of 0.012%, low price of 100.86, with 31.6719% of bids allotted at the high yield.

  • Given the proximity of outright yields to the perceived yield floor of 0% (at least under the current market structure/economic backdrop), most desks note there is little outright value in 10s as we head into supply.
  • Desks have also pointed to a lightening up of positions at dealers, which would usually boost demand in a more attractive yield environment.
  • Several desks like short belly positions in the 5-/7-/10-Year JGB butterfly i.e. longs in 5s and 10s vs. shorts in 7s, with the attractiveness of that position boosted by the carry & roll profile of 10s. As a reminder 10s offer the most attractive carry & roll profile on the curve, while the 5-/7-Year yield spread is particularly flat at present.
  • Results due at 0435BST/1235JST.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

To read the full story

Close

Why MNI

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.