JGBS: Little Changed After BoJ Delivers Expected Result

The Japanese Ministry of Finance (MoF) sells Y1,977.6bn 10-Year JGBs:

• Average Yield: 1.442% (prev. 1.512%)
• Average Price: 100.50 (prev. 99.04)
• High Yield: 1.446% (prev. 1.513%)
• Low price: 100.47 (prev. 99.03)
• % Allotted At High Yield: 96.5206% (prev. 66.8994%)
• Bid/Cover: 3.5070x (prev. 3.6627x)

• China's key bond futures all delivered gains in morning trade as the PBOC withdrew liquidity in the OMO
• The 10YR future is up +0.06 to 108.96 and is approaching the 20-day EMA of 108.98
• The 2yr future is up +0.01 to 102.50 and is approaching the 50-day EMA of 102.50
• The CGB 10YR is 1.65% in this mornings trading.  

The Japanese Ministry of Finance (MoF) will today sell Y2.6tn of 10-year JGBs. The MoF last sold 10-year debt on 3 June 2025. This month’s auction offers an outright yield 5-10bps lower than last month and approximately 15bps below the recent cyclical high of 1.596% reached in late March, just prior to President Trump’s announcement on reciprocal tariffs.

• Moreover, the 2s/10s and 7s/10s yield curves are flatter than last month.
• Notably, investor sentiment toward longer-dated global bonds has improved over June.
• Governor Kazuo Ueda reaffirmed on June 20 that the BoJ would consider raising its benchmark interest rate if its economic outlook materialises. Speaking at a financial conference in Tokyo, Ueda noted that Japan's real interest rate remains significantly low and emphasised the importance of assessing whether the BoJ's projections are being met, without preconceived assumptions.
• Against this backdrop, it remains to be seen whether the current 10-year yield level will be sufficient to maintain strong demand in today’s auction.
• Results are due at 0435 BST / 1235 JT.