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PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y700bn of 30-Year JGB's
re-opening JB#66. The MOF last sold 30-Year debt on May 14, the auction drew
cover of 3.688x at an average yield of 0.449%, average price of 98.69, high
yield of 0.453%, low price of 98.60, with 65.4037% of bids allotted at the high
- 30s are currently testing YtD cheaps in outright terms, last 0.539%, and have
cheapened vs swap in recent sessions, with some signs of swap paying from
foreign accounts aiding that dynamic, although spread levels remain suppressed
in historical terms (comparable swaps sit 17bp through 30s). The 20-/30-/40-Year
fly sits within the range observed since early April.
- The lack of BoJ Rinban ops covering longer dated paper, in addition to the
willingness of the BoJ to promote a steeper curve may limit demand at auction,
although this isn't a new theme. While recent concession makes passage of supply
easier, participants will be assessing the move vs. the odds of further
cheapening given hope re: the gradual re-opening of the global economy.
- Results due at 0435BST/1235JST
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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