PREVIEW: 5-Year Supply Due

The Japanese MOF will today sell Y2.5tn of 5-Year JGB's re-opening JB#146. The MOF last sold 5-Year debt on February 16, the auction drew cover of 3.491x at an average yield of -0.101%, average price of 100.98, high yield of -0.097%, low price of 100.96, with 72.1873% of bids allotted at the high yield.

• Yesterday's comments from BoJ Deputy Governor Amamiya pointed to a little more willingness re: allowing greater volatility in JGB yields vs. views expressed by BoJ Governor Kuroda at the backend of last week. This, coupled with Amamiya's suggestions that the BoJ could adopt a more creative 10-Year Yield enforcement framework may lead to a less aggressive bidding stance at today's auction.
• Some latent demand is expected, and it may be magnified by the recent sizeable Japanese net selling of offshore bonds on the recent vol. in global FI markets/proximity to FY end in Japan.
• The 2-/5-/10-Year butterfly continues to stick to the narrow range witnessed in recent months. Participants could be tempted to try and fade the recent modest steepening in the 2-/5-Year spread, or engage in 5-/10-Year steepeners ahead of the publishing of the BoJ's monetary policy review given uncertainty re: that matter.
• Results due at 0335GMT/1235JST.