HALISTER1: JGB Yield Curve Flattens; 20-Yr Auction Meets Strong Demand: UBS

JGB Yield Curve Flattens; 20-Yr Auction Meets Strong Demand: UBS

(Bloomberg) -- Japan’s govt bonds gain, led by longer-maturity debt, after auction of 20-yr bonds drew higher bid-to-cover ratio and record-low avg yield.
  • Yield on 5-yr note declines 1.5 bps to -0.140%, while 10-yr yield falls 3.5 bps to 0.050%; 20-yr yield slides 6 bps to 0.760%; click here for auction results
  • Auction outcome was strong, says Yusuke Ikawa, Tokyo-based strategist at UBS
  • NOTE: BOJ starts negative rate today; trading in unsecured overnight call market is centered around 0.001%, according to Central Tanshi
  • Should unsecured overnight call rate remain above zero, investors are likely to expect increased bond purchases by the central bank, Ikawa says; such expectations would exert flattening pressure on yield curve
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Source: BFW (Bloomberg First Word)

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Yusuke Ikawa (UBS Asset Management Japan Ltd)

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