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Weak 20-Year JGB Supply; Cover Ratio Plunges To Lowest In 10 Years

JGBS

A weak round of 20-Year JGB supply saw the low price print significantly below wider expectations (99.250 vs 100.500 per the BBG dealer poll), with the price tail widening as well. The cover ratio declined to 2.51x from the previous auction’s 3.28x, coming in at lowest level seen since Aug ‘12.

  • The apparent return of international investors for a renewed challenge of the BoJ’s will re: its YCC settings likely limited wider demand, with a lack of relative value also providing headwinds, as we flagged pre-auction
  • Super-long JGBs and JGB futures cheapened post-auction.
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A weak round of 20-Year JGB supply saw the low price print significantly below wider expectations (99.250 vs 100.500 per the BBG dealer poll), with the price tail widening as well. The cover ratio declined to 2.51x from the previous auction’s 3.28x, coming in at lowest level seen since Aug ‘12.

  • The apparent return of international investors for a renewed challenge of the BoJ’s will re: its YCC settings likely limited wider demand, with a lack of relative value also providing headwinds, as we flagged pre-auction
  • Super-long JGBs and JGB futures cheapened post-auction.