Recent auctions don’t shake JGB market at all
Having skipped the JGB auction reviews in September and October, we summarize those results: 10-year JGB auction on September 1 resulted in a 2.96 b/c ratio, the lowest since June, but a 0.01 yen tail, which indicated strong biddings. The 10yr auction on October 4 had a good result in a 3.15 b/c ratio with a 0.02 yen tail. Anonymous takedowns, which are closely watched as those of major banks and a few dealers, were both arond 400 billion yen, and major banks’ appetite for the 10 year sector has been steady but not extraordinary large.
In terms of 5-year JGB auctions, the September auction had a result with a 2.68 b/c ratio and a 0.01 yen tail. That was slightly weak, because many banks sold massive JGBs, particularly in the medium term sector, for profit-taking for the end of the fiscal term. The October auction had the similar result with the previous month, with the b/c ratio of 2.72 and the zero tail. That result suggested that many banks would continue investing in the medium term sector, rather than shift to selling the medium-term sector and buying the longer sector to extend duration.
These results above did not fundamentally infulence the JGB market direction, while overseas yields largely moved in these months. The charts below compare 5-day changes in 5-year and 10-year JGB prices before and after the auction date. The recent stability is outstanding.
