Solid Demand Seen At 2-Year JGB Auction

The 2-year supply has witnessed solid demand, with the low price exceeding dealer expectations, which had been projected at 100.09, according to the BBG poll.

• However, the cover ratio has slightly decreased to 3.950x compared to 4.263x recorded in last month's auction. It's noteworthy that the cover ratio observed in June was the highest for a 2-year auction since September 2022. Setting aside last month's performance, today's cover ratio is the highest since February, reflecting the continued robust interest in this maturity.
• The recent cheapening in the outright yield seems to have countered any uncertainty surrounding BOJ policy ahead of Friday's decision. Notably, the auction tail remained relatively short, marking one of the lowest levels seen this year. The % Allotted At High Yield did however jump.
• The 2-year JGB is little changed at -0.40% in post-auction trade, with JGB futures slightly firmer.