JGBS AUCTION: 5-Year JGB Auction Results

The Japanese Ministry of Finance (MoF) will today sell Y1.0tn of 20-Year JGBs. 

• Today’s 20-year JGB auction offers an outright yield at its cycle high, approximately 15bps above last month’s level.
• Moreover, the 10/20 yield curve has steepened dramatically over the past month, hitting its steepest since 1999.
• Additionally, the 20-year JGB has cheapened to its cheapest valuation within the 10/20/30 butterfly since early 2023.
• On the other hand, the auction comes amid souring sentiment toward long-term global bonds.
• Given these dynamics, it remains to be seen whether today’s supply can generate some positive momentum for JGB auctions or if market caution will weigh on demand.
• Results are due at 0435 GMT / 1235 JT.

The Japanese Ministry of Finance (MoF) will today sell Y1.0tn of 20-Year JGBs. The MoF last sold 20-year debt on 12 March 2025, the auction drew cover of 3.4594x at an average yield of 2.278%, an average price of 96.20, a high yield of 2.294%, a low price of 96.00, with 44.1031% of bids allotted at the high yield.

• Today’s 20-year JGB auction follows mixed results across key metrics at last month’s outing. The low price underperformed dealer forecasts, according to a Bloomberg poll. However, the cover ratio increased to 3.4594x from 3.0557x in the previous auction and the auction tail shortened dramatically to 0.20 from 0.55.
• Today’s auction comes on the heels of very poor demand metrics observed in this month’s 30-year JGB auctions. The low price fell short of dealer expectations according to a Bloomberg poll. Moreover, the cover ratio declined to 2.9582x from 3.4997x, while the auction tail widened significantly to 0.75 — the largest since 2023 — up from just 0.12 previously.
• Results are due at 0435 BST / 1235 JT.

The local bank has nudged up its Q1 inflation forecasts after this morning's food price data. Q1 data prints this Thursday. 

Westpac: "With continued strength in food prices, we’ve nudged our forecast for March quarter CPI up to 0.8% (up from 0.7% previously). That was mainly due to today’s stronger than expected food prices data. 

That revision leaves our updated forecast in line with the RBNZ’s February MPS forecast.  We also have the same forecasts for non-tradables (+0.9%) and tradable inflation (+0.7%).

The annual inflation rate is set to rise to 2.4%, up from 2.2% at the end of last year, but still comfortably within the RBNZ’s target band. Core inflation is also expected to remain well contained."