EUR: EUR/USD - Gravitates Back Toward 1.1600

The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-year JGBs. The MoF last sold 10-year debt on 2 July 2026. This month's auction offers an outright yield ~10bps above the level of last month's auction and ~10bps below its cycle high.

• The 2s/10s yield curve is ~10bps flatter last month's auction and around 20bps below its cycle high. Moreover, the 7s/10s curve, a measure of value between JB1 futures and the 10-year, is slightly flatter than last month and sits near the top of the past year's range.
• Sentiment toward longer-dated bonds remains pressured by the effects of the Middle East conflict.
• Against this backdrop, it remains to be seen whether the current 10-year yield level will be sufficient to improve demand in today's auction.
• Results are due at 0435 BST / 1235 JT.

The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-year JGBs. The MoF last sold 10-year debt on 2 July 2026. The auction drew cover of 3.1302x at an average yield of 2.729%, an average price of 99.77, a high yield of 2.755%, a low price of 99.57, with 91.4461% of bids allotted at the high yield.

• Last month, the 10-year auction delivered weak results, with the low price beating expectations at 99.77, according to the Bloomberg dealer poll. Moreover, the cover ratio decreased to 3.1302x from 3.5200x and the tail lengthened to 0.20 from 0.05.
• That performance came with an outright yield that was 5-10bps above the level of prior month's auction level but ~10bps below its cycle high.
• The 2s/10s yield curve was ~10bps steeper than the prior month's auction level and was hovering just below its cycle high.
• Results are due at 0435 BST / 1235 JT.

*JAPAN 10Y GOVT BOND AUCTION MAY HAVE 99.22 LOWEST PRICE:POLL– BLOOMBERG