PREVIEW: 5-Year JGB Supply Due

The Japanese MOF will today sell Y2.5tn of 5-Year JGB's re-opening JB#148. The MOF last sold 5-Year debt on August 24, the auction drew cover of 3.756x at an average yield of -0.120%, average price of 100.61, high yield of -0.116%, low price of 100.59, with 3.0486% of bids allotted at the high yield.

• 5s have cheapened away from multi-month richest levels in recent sessions, with focus on the potential fiscal implications surrounding a new Japanese Prime Minister garnering attention after incumbent PM Suga noted that he will not run in the upcoming LDP Party leadership race. That leaves 5s around the middle of the YtD range in yield terms, which shouldn't inhibit demand at today's auction.
• The 2-/5-Year curve has seen some modest steepening in recent weeks, which may promote some relative value appeal at today's auction, whether that be via initiating 2-/5-Year flatteners or via outright demand for 5s. 5s also sit at multi-month cheaps on the 2-/5-/10-Year butterfly.
• Results due at 0435BST/1235JST.