PREVIEW: 30-Year Supply Due

The Japanese MOF will today sell Y900bn of 30-Year JGB's re-opening JB#68. The MOF last sold 30-Year debt on November 10, the auction drew cover of 3.762x at an average yield of 0.643%, average price of 98.91, high yield of 0.645% low price of 98.85, with 79.7183% of bids allotted at the high yield.

• At least some latent demand is set to come from domestic life insurers, given their investment plans for the second half of the fiscal year/offshore FX-hedged yield dynamics. This has made for a lack of pre-auction concession over the last couple of sessions. Still, supplementary budget worry may throw a proverbial spanner into the works.
• In outright terms, 30-Year yields hover around the highest levels seen since early 2019, although the aforementioned domestic fiscal dynamic coupled with the focus on similar matters in the U.S./COVID-19 vaccine matters may mean that those looking for outright long opportunities aren't too keen to bid aggressively today. We should flag that Mizuho recently noted that rhetoric surrounding the meeting of JGB market special participants pointed to a greater likelihood of 20- or 40-Year issuance hikes, if required, as opposed to 30-Year.
• 10s continue to provide a more attractive carry and roll proposition vs. the super-long end.
• Still ASW plays may draw interest in auction, given the recent dynamic in that space.
• Results due at 0335GMT/1235JST.