Mizuho Securities recommends outright longs for the upcoming JPY600bn 30y JGB auction, citing attractive 3.8% yield levels and trust bank rebalancing demand.
Key Takeaways
- 1.Yield levels for the 30y JGB (3.810% as of May 12) are significantly higher than the previous month's auction and are expected to support bidding.
- 2.Portfolio rebalancing by trust banks, driven by global equity rallies and Nikkei 225 exceeding 60,000, provides a demand cushion for domestic bonds.
- 3.Concerns over fiscal expansion due to the Takaichi administration's energy subsidies and the Iran conflict are creating yield pressure, but actual JGB issuance is unlikely to increase significantly.
Table of Contents
- (1) Positives and negatives ahead of the 30y auction
- POTENTIAL POSITIVES
- POTENTIAL NEGATIVES
- Auction strategy
- OUTRIGHT LONGS
- (2) Key charts
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Authors
Yurie Suzuki
Securities
JX90Nikkei 225
Themes
Fiscal Expansion ConcernsGeopolitical Risk PremiumMonetary Policy Normalization
Regions
Asia PacificMiddle EastJapanIran