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Decent SONIA Action Tuesday


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JGBS AUCTION: The Japanese Ministry of Finance will today sell Y800mln of 0.80%
30-Year JGBs, the bonds will mature on 20 March 2048.
- The MOF last sold 30-Year debt on February 08, the sale drew an average yield
of 0.820% at 99.50, a high yield of 0.822% at 99.45 with 92.6464% of bids
allotted at the high yield, the sale was covered 4.273x.
- 30-Year yields have edged lower since the start of February despite the BoJ
reducing the size of its purchases in the 25-Year+ sector to promote a
steepening yield curve (this followed a reduction in the 10-Year+ buckets in
January). Benchmark 30-Year yields are now circa 7bp softer than they were at
the time of the last 30-Year auction.
- Last Friday's comments from BoJ Gov Kuroda re: normalisation in FY19 roiled
the curve out to 10-Years, but the super-long sector remained firm.
- The appreciation of the JPY and the pullback in stocks, alongside seasonal
demand heading in to FY end are likely to have been the supportive factors, and
should mean that the upcoming auction passes smoothly despite the line's
apparent richness in relative terms. Results due at 0345GMT/1245JST.
MNI London Bureau | +44 0203-865-3809 |