PREVIEW: 20-Year Supply Due

The Japanese MOF will today sell Y1.2tn of 20-Year JGB's re-opening JB#177. The MOF last sold 20-Year debt on August 26, the auction drew cover of 3.653x at an average yield of 0.405%, average price of 99.89, high yield of 0.408%, low price of 99.85, with 72.6958% of bids allotted at the high yield.

• 20s have cheapened in outright terms over the past couple of weeks, initially in reaction to news that the incumbent Japanese PM Suga would not seek re-election atop the LDP Party. The initial outlines from the frontrunners to succeed Suga surrounding fiscal support schemes don't seem to be hugely disjointed, which has allowed the longer end of the curve to stabilise a little, although the financing requirements of such schemes may result in some cheapening impetus in coming weeks/months. However, the recent, albeit relatively contained cheapening from multi-month richest levels, alongside the fact that 20s provide the most attractive carry & roll proposition on the curve, may support demand today.
• 20s have cheapened away from recent richest levels on the 10-/20-/30-Year butterfly, but remain within the confines of the range witnessed over recent months when it comes to that particular strategy.
• Results due at 0435BST/1235JST.