JGBS: Reuters Reports Japan To Cut Super Long Bond Sales By 10%

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 near its cycle high, approximately 5bps above last month’s level.
• Moreover, the 10/20 yield curve remains near its recent high, its steepest since 1999.
• However, the 20-year JGB has richened over the past month and sits near its richest valuation within the 10/20/30 butterfly seen during the past year.
• Furthermore, 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.

*JAPAN 20Y GOVT BOND AUCTION MAY HAVE 99.80 LOWEST PRICE: POLL– BLOOMBERG

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• Bank Indonesia (BI) announces its meeting decision on May 21 and FX stability will remain its focus but rupiah appreciation since the last meeting may allow it to cut rates for the first time since January.
• 21 of 32 analysts surveyed by Bloomberg are forecasting a 25bp reduction to 5.5% with the rest expecting them to be on hold.
• There are signs that the economy is slowing, inflation is within the target band and expected to stay there and there is significant global uncertainty. However, the question remains if the rupiah has appreciated enough for BI to feel confident to cut rates.