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PREVIEW: 20-Year JGB Supply Due

JGBS AUCTION

The Japanese MOF will today sell Y1.2tn of 20-Year JGBs, re-opening JB#183. The MOF last sold 20-Year debt on 21 February 2023, the auction drew cover of 3.048x at an average yield of 1.306%, average price of 101.48, high yield of 1.314%, low price of 101.35, with 88.9563% of bids allotted at the high yield.

  • The recent shunt lower in outright yields, coupled with curve flattening and threat of further BoJ Rinban tweaks, provide some headwinds for today’s supply.
  • Meanwhile, 20s operate around the middle of their YtD range on the 10-/20-/30-Year butterfly after bouncing off recent richest levels on that structure.
  • Still, outright yields have recovered the 1.00% handle, but sit over 20bp below prevailing levels witnessed at last month’s 20-Year auction.
  • Elevated market vol. and the risk of a hawkish repricing re: global central banks also provide some risks for duration demand, which may further limit bidding.
  • The proximity to Japanese FY end is a general positive for demand.
  • There are some downside risks to the auction given the above factors, although some desks flag potential interest in ASW positions and 20-/30-Year steepeners.
  • Results due at 0335GMT/1235JST.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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