Weak Demand Metrics For Today’s 2Y Supply

The 2-year bond supply has demonstrated weak demand, as the offered price failed to meet dealer expectations, which had been projected at 99.98, as per the BBG poll.

• Moreover, the cover ratio saw a decline to 3.045x from 3.273x recorded at the previous month's auction. It's worth noting that today’s cover ratio was the lowest for a 2-year auction since 2010. Addiitonally, the tail lengthened to its equal longest this year.
• Considering that today's auction took place amidst adequate demand indicators for 5- and 10-year JGB offerings, the result is likely to be viewed as very weak, especially given that the outright yield was the highest since 2014.
• The notable steepening of the 2/5 JGB yield curve since June, reaching its most pronounced point since 2011, appears to have strongly influenced demand today compared to the recent 5-year auction.
• Following the 2-year JGB auction, there was a slight downtick in yield in post-auction trade, although this was subsequently reversed. JGB futures are steady in early afternoon trading.