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PREVIEW: 5-Year JGB Auction

JGBS AUCTION
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The Japanese Ministry of Finance (MoF) will today sell Y2.3tn of 5-Year JGBs. The MoF last sold 5-year debt on 9 July 2024, with the auction drawing cover of 4.256x at an average yield of 0.612%, an average price of 99.94, a high yield of 0.614%, a low price of 99.93, with 64.5510% of bids allotted at the high yield.

  • July’s supply of 5-year bonds showed strong demand metrics. The auction's low price beat dealer expectations, with the cover ratio of 4.256x higher than the 3.971x recorded at June’s auction. The auction tail was also marginally shorter.
  • However, today's auction comes on the heels of a poor 10-year outing in August. The low price failed to meet wider expectations, the cover ratio fell to 2.975x from 3.277x at July’s auction and the tail exploded to 0.5 from 0.02 in July.
  • The current outright yield is 15bps lower than July’s offering and 20-25bps lower than late July’s cyclical peak.
  • Moreover, the 2/5 curve is 15bps flatter than the July outing and sits near the bottom of the range it has traded in since December 2022.
  • Given these developments, it will be interesting to observe whether today's auction will buck the recent trend of weaker demand metrics witnessed in JGB auctions.
  • Results are due at 0435 BST / 1235 JST.
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The Japanese Ministry of Finance (MoF) will today sell Y2.3tn of 5-Year JGBs. The MoF last sold 5-year debt on 9 July 2024, with the auction drawing cover of 4.256x at an average yield of 0.612%, an average price of 99.94, a high yield of 0.614%, a low price of 99.93, with 64.5510% of bids allotted at the high yield.

  • July’s supply of 5-year bonds showed strong demand metrics. The auction's low price beat dealer expectations, with the cover ratio of 4.256x higher than the 3.971x recorded at June’s auction. The auction tail was also marginally shorter.
  • However, today's auction comes on the heels of a poor 10-year outing in August. The low price failed to meet wider expectations, the cover ratio fell to 2.975x from 3.277x at July’s auction and the tail exploded to 0.5 from 0.02 in July.
  • The current outright yield is 15bps lower than July’s offering and 20-25bps lower than late July’s cyclical peak.
  • Moreover, the 2/5 curve is 15bps flatter than the July outing and sits near the bottom of the range it has traded in since December 2022.
  • Given these developments, it will be interesting to observe whether today's auction will buck the recent trend of weaker demand metrics witnessed in JGB auctions.
  • Results are due at 0435 BST / 1235 JST.