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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 10 September 2024, with the auction drawing cover of 3.7588x at an average yield of 0.521%, an average price of 99.90, a high yield of 0.525%, a low price of 99.88, with 23.0916% of bids allotted at the high yield.

  • Last month’s supply of 5-year bonds showed solid demand metrics. The auction's low price met dealer expectations and the cover ratio increased to 3.7588x from 3.5109x at August’s auction. The auction tail was also shorter.
  • Moreover, today's auction comes on the heels of a strong 10-year auction in October. The cover ratio rose to 3.529x from 3.17x at the prior month’s auction and the tail shortened to 0.02 from 0.09 in September.
  • The current outright yield is around 5bps higher than last month’s offering but still 10bps lower than late July’s cyclical peak.
  • While the 2/5 curve is slightly steeper than a month ago but remains 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 10 September 2024, with the auction drawing cover of 3.7588x at an average yield of 0.521%, an average price of 99.90, a high yield of 0.525%, a low price of 99.88, with 23.0916% of bids allotted at the high yield.

  • Last month’s supply of 5-year bonds showed solid demand metrics. The auction's low price met dealer expectations and the cover ratio increased to 3.7588x from 3.5109x at August’s auction. The auction tail was also shorter.
  • Moreover, today's auction comes on the heels of a strong 10-year auction in October. The cover ratio rose to 3.529x from 3.17x at the prior month’s auction and the tail shortened to 0.02 from 0.09 in September.
  • The current outright yield is around 5bps higher than last month’s offering but still 10bps lower than late July’s cyclical peak.
  • While the 2/5 curve is slightly steeper than a month ago but remains 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.