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At the Tokyo lunch break, JGB futures are slightly stronger, +2 compared to the settlement levels.

• Cash US tsys are little changed in today's Asia-Pac session after yesterday's modest rally
• Cash JGBs are flat to 1bp cheaper across benchmarks. The benchmark 20-year yield is 0.5bp higher at 2.671% ahead of today's supply.
• Last month’s 20-year JGB auction showed mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 98.85 according to a Bloomberg poll. Moreover, the cover ratio declined to 3.0853 from 3.1462x in the previous auction. The auction tail did, however, shorten to 0.13 from 0.18.
• Today’s 20-year JGB auction offers an outright yield near its cycle high, 10bps above last month’s level.
• Moreover, the 10/20 yield curve remains near its recent high, its steepest since 1999.
• Swap rates are flat to 1bp higher. Swap spreads are mixed.

The Japanese Ministry of Finance (MoF) will today sell Y800bn of 20-Year JGBs. The MoF last sold 20-year debt on 19 August 2025.

• Today’s 20-year JGB auction offers an outright yield near its cycle high, 10bps above last month’s level.
• Moreover, the 10/20 yield curve remains near its recent high, its steepest since 1999.
• The 20-year JGB is at similar valuation to last month in terms of the 10/20/30 butterfly.
• On the other hand, the auction comes amid an improvement in 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 Y800bn of 20-Year JGBs. The MoF last sold 20-year debt on 19 August 2025, the auction drew cover of 3.0853x at an average yield of 2.581%, an average price of 98.93, a high yield of 2.591%, a low price of 98.80, with 65.3666% of bids allotted at the high yield.

• Last month’s 20-year JGB auction showed mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 98.85 according to a Bloomberg poll. Moreover, the cover ratio declined to 3.0853 from 3.1462x in the previous auction. The auction tail did, however, shorten to 0.13 from 0.18.
• Today’s auction also comes on the heels of lacklustre demand metrics observed in this month’s 30-year JGB auctions. The cover ratio dipped to 3.31x from 3.4297x and the auction tail lengthened to 0.18 from 0.15, indicating a weakening in bidding strength.
• Results are due at 0435 BST / 1235 JT.