JGBS: Twist-Flattener Holding At Lunch

The Japanese Ministry of Finance (MoF) will today sell Y800bn of 20-Year JGBs. The MoF last sold 20-year debt on 10 July 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 a similar valuation to last month in terms of the 10/20/30 butterfly.
• On the other hand, the auction comes amid a slight 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.

*JAPAN 20Y GOVT BOND AUCTION MAY HAVE 98.85 LOWEST PRICE:POLL – BLOOMBERG

The Japanese Ministry of Finance (MoF) will today sell Y800bn of 20-Year JGBs. The MoF last sold 20-year debt on 10 July 2025, the auction drew cover of 3.1462x at an average yield of 2.482%, an average price of 100.23, a high yield of 2.496%, a low price of 100.05, with 20.3084% 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 100.10 according to a Bloomberg poll. However, the cover ratio increased to 3.1462x from 3.1070x in the previous auction and the auction tail shortened to 0.18 from 0.28.
• Today’s auction also comes on the heels of mixed demand metrics observed in this month’s 30-year JGB auctions. The low price aligned with dealer expectations of 95.35, per the Bloomberg survey. However, the cover ratio dipped to 3.4297x from 3.5796x. On the other hand, the auction tail shortened significantly to 0.15 from 0.31, indicating an improvement in bidding strength.
• Results are due at 0435 BST / 1235 JT.