Smooth Digestion Of 40-Year Supply

A solid enough round of 40-Year JGB supply sees the cover ratio tick away from the multi-year low observed at the previous 40-Year auction (although it still held below its 6-auction average of 2.53x), while the high yield is lower than wider expectations evident ahead of the auction (which stood at 1.085%). The steep domestic yield curve (in both domestic and international terms) and short-term stability in government bond markets, coupled with the fact that 40-Year yields are near cycle highs, seemingly enticed bidders, as we suggested may be the case in our auction preview. Nothing in the way of immediate tangible impact in JGB futures, nor in 40-Year cash JGBs.