JGBS: Modest Twist-Steepener At Lunch

The Japanese Ministry of Finance (MoF) will today sell Y800bn of 20-Year JGBs. The MoF last sold 20-year debt on 19 February 2026, the auction drew cover of 3.0770x at an average yield of 2.968%, an average price of 102.89, a high yield of 2.979%, a low price of 102.75, with 59.5330% of bids allotted at the high yield.

• Last month’s 20-year JGB auction delivered mixed demand signals. The low price matched dealer expectations at 102.75, according to the Bloomberg survey. However, the bid-to-cover ratio eased to 3.0770x from 3.1917x previously. Offsetting this, the tail narrowed sharply to 0.14 from 0.25, pointing to firmer demand at the margin.
• Last month’s 20-year supply came with the outright yield around 35bps below the prior month’s level and roughly 50bps beneath the recent cycle high.
• Moreover, the 10s/20s spread had broken below the lower bound of the range that had held since mid-last year. The curve was around 30bps flatter than its recent peak — the steepest level seen since 1999.
• Today’s auction follows solid demand in this month’s 30-year JGB sale. In contrast, this month’s 10-year JGB auction delivered mixed results, with the low price failing to meet expectations at 99.77, according to the Bloomberg dealer poll. However, the cover ratio increased to 3.3043x from 3.0196x. The tail also lengthened slightly to 0.06 from 0.05.
• Consistent with that relative auction performance, the 10/30 JGB curve is hovering just above its flattest level since April last year. 

February new home prices in first-tier cities reversed January’s 0.3% decrease to grow 0.0% month-on-month, sending a significant signal as it ended the previous nine-month downward trend, Xinhua Finance reported citing analysts. Prices of second-hand housing in tier-one cities fell by 0.1% m/m, narrowing by 0.4 pp from the previous decline. Analysts said home prices tend to stabilise in the near term, supported by increased supply of high-quality new homes and developers’ promotional campaigns which will help stimulate demand for replacement.