PREVIEW: 20-Year supply Due

The Japanese MOF will today sell Y1.2tn of 20-Year JGB's re-opening JB#176. The MOF last sold 20-Year debt on April 20, the auction drew cover of 3.343x at an average yield of 0.438%, average price of 101.12, high yield of 0.439%, low price of 101.10, with 79.6285% of bids allotted at the high yield.

• Several desks have highlighted the relative carry & roll profile vs. longer dated paper as a supportive factor heading into supply, while the proximity to the 0.45% yield mark may also lure domestic interest.
• Several desks have also noted that short covering from the primary dealer community may bolster demand further.
• ASW spreads seem to have found a base, which may also facilitate demand at the auction.
• However, from a relative value perspective, the 10-/20-/30-Year fly operates around the lows of the range in play since late January, which could have an incremental impact on demand.
• Results due at 0435BST/1235JST.