February 21, 2023 03:04 GMT
PREVIEW: 20-Year JGB Supply Due
The Japanese MOF will today sell Y1.2tn of 20-Year JGBs, re-opening JB#183. The MOF last sold 20-Year debt on 19 January 2023, the auction drew cover of 3.365x at an average yield of 1.341%, average price of 100.92, high yield of 1.342%, low price of 100.90, with 92.3846% of bids allotted at the high yield.
- Outright yield levels, coupled with relative value appeal (20s have moved back towards cycle cheaps on the 10-/20-/30-Year butterfly) should provide smooth enough underwriting of today’s supply.
- However, domestic investors have been sellers of the super-long end in lieu of elevated uncertainty re: the BoJ in the post-Kuroda era (evidenced by MoF data covering January flows), which will likely cap overall demand.
- Also note that worry re: higher for longer rates across the major global central banks could cap overall demand.
- These headwinds clearly introduce downside risks to overall demand levels.
- Results due at 0335GMT/1235JST.