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The Japanese Ministry of Finance (MOF) will....>

JGBS
JGBS: The Japanese Ministry of Finance (MOF) will today sell Y2.2tln of 0.10%
5-Year bonds, results due at 0345BST/1245JST. The MOF last sold 5-Year debt on
Oct 19, selling Y1.782tln in the competitive sale, drawing an avg. yield of
-0.082%/100.90, high yield at -0.082%/100.90. The auction was covered 4.24x.
- Yields in the 5-Year sector have declined recently, the on the run 5-Year
issue last yielding -0.111%, this is some 3.8bp off recent lows hit on 8
November. Yields in the short end have seen the most dramatic drop as banks seek
to avoid negative deposit rates and parkn excess cash in short term bonds, the
recent drop in Japanese stocks has exacerbated this effect and pushed buyers
down the yield curve. The risk off environment and recent recovery from lows in
yields should support demand at the auction.
- Recent BoJ comments that easy policy is set to continue should also be
supportive of demand at the auction.
- Swaps outperforming yields in the 5-Year sector today, cheapening 0.2bp to
L-19.7bp after hitting lows of L-22.3bp last week, the Z-score on the issue
looks rich but has come off recent lows as yields make a concession.

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