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PREVIEW - 2-Year JGB Auction Due

JGBS AUCTION
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The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 2-Year JGBs. The MoF last sold 2-year debt on 28 August 2024, the auction drew cover of 5.542x at an average yield of 0.385%, an average price of 100.028, a high yield of 0.387%, a low price of 100.025, with 82.2855% of bids allotted at the high yield.

  • Last month’s 2-year Treasury auction showed robust demand, with the low price surpassing dealer expectations and the cover ratio rising to 5.542x, up from 4.187x in July. The auction tail was also slightly shorter compared to July’s.
  • Today's auction occurs in the context of an outright yield level similar to late August and roughly 10bps below the cyclical peak reached in early August—the highest since 2009.
  • Both the 2/5 and 2/10 yield curves are near their flattest levels over the past 12 months.
  • Notably, this auction follows September’s 5-year auction, which also reflected strong demand.
  • Furthermore, it’s important to highlight that shorter-dated JGB yields have risen today, following Ishiba’s unexpected victory in the LDP leadership run-off against Takaichi, a noted BoJ dove.
  • Given this context, it will be interesting to see if the current 2-year yield will be sufficient to attract demand in today's auction.
  • Results are due at 0435 BST / 1235 JST.
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The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 2-Year JGBs. The MoF last sold 2-year debt on 28 August 2024, the auction drew cover of 5.542x at an average yield of 0.385%, an average price of 100.028, a high yield of 0.387%, a low price of 100.025, with 82.2855% of bids allotted at the high yield.

  • Last month’s 2-year Treasury auction showed robust demand, with the low price surpassing dealer expectations and the cover ratio rising to 5.542x, up from 4.187x in July. The auction tail was also slightly shorter compared to July’s.
  • Today's auction occurs in the context of an outright yield level similar to late August and roughly 10bps below the cyclical peak reached in early August—the highest since 2009.
  • Both the 2/5 and 2/10 yield curves are near their flattest levels over the past 12 months.
  • Notably, this auction follows September’s 5-year auction, which also reflected strong demand.
  • Furthermore, it’s important to highlight that shorter-dated JGB yields have risen today, following Ishiba’s unexpected victory in the LDP leadership run-off against Takaichi, a noted BoJ dove.
  • Given this context, it will be interesting to see if the current 2-year yield will be sufficient to attract demand in today's auction.
  • Results are due at 0435 BST / 1235 JST.