20y JGB Auction Preview

Mizuho previews the 20-year JGB auction on 25 June, balancing attractive yield levels against persistent fiscal deterioration concerns. Analysts suggest cautious positioning, specifically exploring tactical 20s30s steepeners and 20y ASW trades.

Key Takeaways

• 1.The 20y JGB yield is currently 3.570%, lower than the May auction but above the 3.5% threshold, providing support.
• 2.Fiscal deterioration concerns remain a headwind, with potential supplementary budget and investment plans impacting sentiment.
• 3.Tactical steepeners or longer-term 20y asset swap (ASW) positions are suggested given the current curve environment.

Table of Contents

• (1) Positives and negatives ahead of the 20y auction
• POTENTIAL POSITIVES
• POTENTIAL NEGATIVES
• Pre-auction comment
• (2) Key charts
• Important Disclosure Information
• Analyst Certification
• Disclaimer

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