The 20-Year sector is unwinding some of the....>

JGBS: The 20-Year sector is unwinding some of the concession that was evident

ahead of today's 20-Year JGB supply, aided by the low price of the auction

meeting the BBG dealer poll exp. and a slightly higher cover ratio when compared

to the most recent auction. The tail of today's auction was a touch wider than

that seen at last month's 20-Year offering, although the average yield was ~5bp

lower.

- The auction comes at a time when demand for super-long paper is under

question, in the short term at least, after the BoJ trimmed the size of its

10-25 Year JGB purchases last week, which triggered a surge in the offer to

cover ratio at this week's 25+ Year Rinban operations (as the measure touched a

near 5-Year high). The latest 10- & 30-Year JGB auctions, conducted on Feb 5 &

Feb 7 respectively, were stellar, with many suggesting that lifers were

underweight super-long paper heading into FY end. No particular signs of

weakness were observed in the latest round of supply.

- Futures have ticked away from lows on the back of the auction.