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Stellar Demand At 10-Year Auction

JGBS

Stellar demand at the latest 10-Year JGB auction sees no tail, with the BoJ’s YCC cap acting as the marker for takedown given prevailing yield levels in the secondary market, while the cover ratio surges to the highest level observed since 2005, topping 7.00x. It would seem that short covering needs, alongside diminished expectations for near-term monetary policy setting tweaks from the BoJ, yield levels testing the Bank’s YCC cap and short-term relative value appeal (generated from moves such as the recent cheapening on the 5-/10-/20-Year butterfly) were the dominant factors here. JGB futures tick higher in the wake of the auction, pressing to fresh Tokyo session highs.

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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