HALISTER1: JGB Curve Bear-Steepens on Weak Enhanced Liquidity Auction: JPM

JGB Curve Bear-Steepens on Weak Enhanced Liquidity Auction: JPM

(Bloomberg) -- Japan’s sovereign curve bear-steepens as outcome of enhanced liquidity auction indicates weak demand amid global yield rally, spurring concern over 30-year sale on Dec. 8, says Takafumi Yamawaki, chief rates strategist at JPMorgan.
  • NOTE: Auction of bonds with remaining maturities of 15.5 years to 39.0 years drew bid-to-cover ratio of 1.83, down from 2.69 at Oct. 18 sale of similar tenors
  • If 30-year JGB sale has weak result and lifts 10-year yield toward 0.070%, market participants could become aware of possible fixed-rate purchase operation by BOJ: Yamawaki
  • NOTE: BOJ conducted first fixed-rate bond-buying operation, with maturities of 1 to 3 years and 3 to 5 years on Nov. 17
  • JGB 10-year yield rises 1bp to 0.045% after earlier touching 0.050%, highest since Feb. 18; 20-year yield up 2.5 bps at 0.495%, 30-year yield up 3.5bps at 0.620% and 40-year yield up 4.5bps at 0.730%
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Source: BFW (Bloomberg First Word)

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Takafumi Yamawaki (JPMorgan Securities Japan Co Ltd)

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