PREVIEW: 2-Year Supply Due

The Japanese MOF will today sell Y3.0tn of 2-Year JGB's opening #JB423. The MOF last sold 2-Year debt on February 26, the auction drew cover of 4.275x at an average yield of -0.099%, average price of 100.399, high yield of -0.097%, low price of 100.395, with 26.5444% of bids allotted at the high yield.

• Demand for 2-Year supply has been relatively solid in recent months, with this area of the curve somewhat insulated from the broader gyrations in core global FI markets & speculation surrounding BoJ policy ahead of its March decision.
• A degree of this latent demand will likely linger and could be bolstered by any participants looking to re-establish 2-/5-Year or 2-/10-Year steepener positions after the recent pullback from respective steeps in those spreads.
• The auction settles on 1 April i.e. after the end of the Japanese FY, and the proximity to the end of the FY may limit any repatriation type flows as Japanese investors may look deploy capital in foreign bonds after the turn of the FY.
• Results due at 0435BST/1235JST.