PREVIEW: 5-Year Supply Due

The Japanese MOF will today sell Y2.5tn of 5-Year JGB's opening #JB147. The MOF last sold 5-Year debt on March 9, the auction drew cover of 3.250x at an average yield of -0.062%, average price of 100.78, high yield of -0.054%, low price of 100.74, with 18.1264% of bids allotted at the high yield.

• There is little in the way of overpowering outright appeal when looking at 5s, with 5-Year yields hovering around the middle of the range witnessed in the early part of '21. The space looks rich in relative value terms, with the 2-/5-/10-Year butterfly hovering around multi year lows. We should also remember that Japanese participants may be looking for yield pickups (in the form of offshore bonds) given the turn of the fiscal year, which may present another headwind for demand this time out.
• Still, the allure of fresh paper and the reduction of uncertainty given the results of the BoJ's monetary policy review & subsequent tweaks to policy (which has seen modest improvements in demand at subsequent 10- & 30-Year auctions) will likely provide an underlying bid.
• Results due at 0435BST/1235JST.