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Stronger Demand Seen At 2-Year JGB Auction

JGBS

2-year supply sees solid demand as the low price comes above dealer expectations (which stood at 100.12, per the BBG poll). The cover ratio at 4.263x ticked up versus 3.769x at last month’s auction.

  • The recent richening in the outright and flattening of the 2/5 curve failed to have a significant impact on demand given the cover ratio jumped to its highest level observed at a 2-year auction since September with a reduced tail. The receding possibility of BoJ policy adjustments in the upcoming months appears to have supported the bid at today’s outing, as flagged in our auction preview.
  • The 2-year JGB is 1.0-1.5bp richer at -0.075% in post-auction trade, with JGB futures little changed in early afternoon trade.

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