PREVIEW: 30-Year JGB Supply Due

The Japanese MOF will today sell Y900bn of 30-Year JGBs opening JB#74. The MOF last sold 30-Year debt on March 3, the auction drew cover of 3.118x at an average yield of 0.893%, average price of 95.45, high yield of 0.895%, low price of 95.40, with 32.1513% of bids allotted at the high yield.

• •Worry surrounding the pull of offshore bond market gyrations may limit outright appeal at today’s auction, even with 30-Year yields just shy of multi-year highs (above 1.00%) and the likes of the 5-. 10- & 20-Year spreads (vs. 30s) hovering just shy of recent, and in some cases, multi-year steeps (although carry considerations are of course a play there, with 30s offering the least attractive carry & roll out of those benchmarks). Some desks have flagged an interest in initiating longs as part of an ASW position, but we wouldn’t expect that to result in a strong auction, with the potential for continued market vol. & worry surrounding further cheapening likely to limit uptake.
• •Results due at 0435GMT/1235JST.