PREVIEW: Little RV, Although Some Supporting Factors For 5s

The Japanese MOF will today sell Y2.5tn of 5-Year JGB's opening JB#145. The MOF last sold 5-Year debt on September 8, the auction drew cover of 3.556x at an average yield of -0.091%, average price of 100.92, high yield of -0.087%, low price of 100.90, with 96.8040% of bids allotted at the high yield.

The on hold BoJ stance, coupled with active BoJ Rinban activity in the belly of the curve should provide support to the auction, although current 5s sit around the prevailing levels (in outright yield terms) witnessed at the previous 5-Year auction, which wasn't particularly well received.

The allure of new paper should also provide some support.

There appears to be little appeal on relative value terms, as indicated by the 2-/5-/10-Year butterfly, while ASWs aren't particularly attractive if we focus on recent ranges.

Results due at 0435BST/1235JST