PREVIEW: 40-Year JGB Supply Due

The Japanese MOF will today sell Y600bn of 40-Year JGB's re-opening JB#14. The MOF last sold 40-Year debt on July 27, the auction drew cover of 2.716x at a high yield of 0.735%, low price of 98.80, with 7.7654% of bids allotted at the high yield.

• Outright 40-Year yields are testing the late June highs ahead of supply, which should promote smooth demand, although the external yield environment and worry re: bloated dealer books may limit the scope for a particularly strong auction.
• The 20-/40- and 30-/40-Year yield spreads have moved away from the recent steeps over the past couple of months, with the build up to the LDP Party leadership vote and the general election that will follow not creating steepening pressure after the earlier nudge higher in curve steepness surrounding expectations re: the deployment of a fiscal package (and its financing needs) ahead of the election.
• Results due at 0435BST/1235JST.