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Weak Demand Metrics For Today’s 2Y Supply

JGBS AUCTION

The 2-year bond supply has demonstrated weak demand, as the low price failed to meet dealer expectations, which had been projected at 99.91, as per the BBG poll.

  • Moreover, the cover ratio saw a decline to 2.911x from 3.045x 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 2009.
  • Considering that today's auction takes place amidst solid demand indicators for November's 5-year offering, the result is likely to be viewed as very weak.
  • As highlighted in our auction preview, the interplay between the emerging bullish sentiment towards short-term global bonds and a diminished outright yield was anticipated to be intriguing. It is evident that the latter factor significantly influenced the bidding dynamics in today's auction.
  • There has so far been no significant reaction in the cash yield in post-auction trade. JGB futures have downticked in early afternoon trading.
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