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The 20-Year sector unwound the concession......>

JGBS: The 20-Year sector unwound the concession that was evident ahead of
today's 20-Year JGB supply as the curve bull flattened in the afternoon session,
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, so that was to be expected.
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. Futures ticked away from lows on the back of the auction.
- The space had little reaction to comments from BoJ Gov. Kuroda who noted that
"the BoJ will consider conducting additional easy policy," if the achievement of
the 2% price is undermined due to developments of foreign exchange rates.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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