US TSYS: Yields Take Back Some of Overnight Moves

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.

• Today’s 20-year JGB auction offers an outright yield 15-20bps higher than last month’s level but still 30bps below the cycle high.
• Consistent with the movement of the broader yield curve, the 10/20 yield curve has recently broken through the bottom of the range that has contained it since the middle of last year. The 10/20 curve is now 25-30bps flatter that its recent high, the steepest since 1999.
• Nevertheless, the 20-year JGB remains mid-range with respect to the 10/20/30 butterfly valuation.
• The auction also takes place against a backdrop of see-sawing sentiment toward long-term bonds given the potential inflationary confluences of the Middle East conflict.
• Given these dynamics, it remains to be seen whether today’s supply will provide positive momentum for JGB auctions or if market caution will weigh on demand.
• Results are due at 0335 GMT / 1235 JT.

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.