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PREVIEW: Solid Enough Demand Expected At 10-Year JGBi Auction

JGBS AUCTION

The Japanese MOF will today sell Y200bn of 10-Year JGBi's re-opening JBI#25. The MOF last sold 10-Year inflation-indexed debt on May 8, the auction drew cover of 3.843x at a high yield of 0.117%, low price of 100.80, with 18.0000% of bids allotted at the high yield.

  • The JGBi supply/BoJ Rinban & MoF buyback demand dynamic should be beneficial for takedown at the auction, with BoJ & MoF JGBi purchases expected to cumulatively exceed the demand on offer today by the time the next auction rolls around in November.
  • The lack of carry may provide headwinds, however, current breakeven levels hover around 0, which is still a way shy of medium to longer term inflation expectations, which should provide at least some underlying demand.
  • Results due at 0435BST/1235JST.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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