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Tuesday saw the 20-Year sector unwind the......>

JGBS: Tuesday saw the 20-Year sector unwind the concession that was evident
ahead of 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.
& 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).
- Futures ticked higher following the auction, extending in late trade &
overnight, breaching some key resistance levels in the process, before running
out of steam ahead of 153.00. This was after BoJ Gov. Kuroda noted that "the BoJ
will consider conducting additional easy policy," if the achievement of the 2%
price is undermined due to developments in FX rates.
- Trade balance data headlines the Japanese docket today.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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