PREVIEW: 2-Year Supply Due

The Japanese MOF will today sell Y3.0tn of 2-Year JGB's opening JB#426. The MOF last sold 2-Year debt on May 31, the auction drew cover of 3.968x at an average yield of -0.125%, average price of 100.262, high yield of -0.124%, low price of 100.260, with 72.2073% of bids allotted at the high yield.

• 2-Year JGB yields sit in the middle of the recently observed range ahead of today's auction, with the BoJ's continued presence in the market set to underwrite demand.
• There is also a lack of relative appeal, although the fact that the 2-/5-Year yield spread hovers around the middle of recently observed range shouldn't prove to be much of a deterrent.
• 2-Year swap spreads have edged away from the multi-year tights witnessed earlier this year, although those looking for wideners could use the auction to establish positions (with the spread less than 2.0bp off the cycle tights).
• Results due at 0435BST/1235JST.