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PREVIEW: 30-Year JGB Supply Due

JGBS AUCTION

The Japanese MOF will today sell Y900bn of 30-Year JGBs re-opening JB#74. The MOF last sold 30-Year debt on April 7, the auction drew cover of 3.049x at an average yield of 0.989%, average price of 100.25, high yield of 0.993%, low price of 100.15, with 13.0925% of bids allotted at the high yield.

  • The Japanese aversion to offshore bonds, evident in recent weeks, may support takedown at today’s auction, aided by the fact that 30s have edged away from recent outright cheaps, with the curve a touch shy of multi-year steeps (these deviations are relatively limited at present). This may allow some to focus on outright longs and flattener strategies via today’s auction, which could be emboldened by the BoJ’s focus on maintaining its ultra-dovish stance.
  • Lower relative vol. and a pullback in sensitivity to moves in wider core global fixed income markets may embolden bulls further.
  • Still, participants will have to assess the trade off between wider global central bank normalisation (excluding the BoJ), market volatility and the combination of inflationary and recessionary worry.
  • Results due at 0435BST/1235JST.
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The Japanese MOF will today sell Y900bn of 30-Year JGBs re-opening JB#74. The MOF last sold 30-Year debt on April 7, the auction drew cover of 3.049x at an average yield of 0.989%, average price of 100.25, high yield of 0.993%, low price of 100.15, with 13.0925% of bids allotted at the high yield.

  • The Japanese aversion to offshore bonds, evident in recent weeks, may support takedown at today’s auction, aided by the fact that 30s have edged away from recent outright cheaps, with the curve a touch shy of multi-year steeps (these deviations are relatively limited at present). This may allow some to focus on outright longs and flattener strategies via today’s auction, which could be emboldened by the BoJ’s focus on maintaining its ultra-dovish stance.
  • Lower relative vol. and a pullback in sensitivity to moves in wider core global fixed income markets may embolden bulls further.
  • Still, participants will have to assess the trade off between wider global central bank normalisation (excluding the BoJ), market volatility and the combination of inflationary and recessionary worry.
  • Results due at 0435BST/1235JST.