JGBS AUCTION: 5-Year Supply Shows Weak Demand Metrics

The Japanese Ministry of Finance (MOF) sells Y750.9bn 20-Year JGBs:

• Average Yield: 2.349% (prev. 2.278%)
• Average Price: 100.69 (prev. 96.20)
• High Yield: 2.374% (prev. 2.294%)
• Low price: 100.35 (prev. 96.00)
• % Allotted At High Yield: 40.8163% (prev. 44.1031%)
• Bid/Cover: 2.9639x (prev. 3.4594x)

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.