HALISTER1: JGBs Rise; Outcome of 10-Year Linker Auction ’Good’: UBS

JGBs Rise; Outcome of 10-Year Linker Auction ’Good’: UBS

(Bloomberg) -- Results of Japan’s auction of 400b yen ($3.7b) in 10-year inflation-linked bonds were “good,” as issue price was higher than market consensus, says Yusuke Ikawa, a salesperson at UBS Knowledge Network, in an interview.
  • These inflation-linked securities “come with a deflation floor” and are “undervalued” given potential impact from a planned sales tax increase, says Tokyo-based Ikawa; click here for auction’s history
  • For other JGBs, profit-taking selling interest that typically occurs at start of Japan’s fiscal year is rather weak, helping to push yields lower: Ikawa
  • 10-year yield down 0.5 bp to -0.095%, 20-year yield down 0.5 bp to 0.310% and 30-year yield down 0.5 bp to record low 0.390%
  • NOTE: Japan’s inflation-linked bond auction draws higher bid-cover ratio
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Yusuke Ikawa (UBS Asset Management Japan Ltd)

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