Mizuho evaluates the upcoming 40y JGB auction, suggesting outright longs are compelling as yields exceed 4% and issuance levels drop, despite geopolitical and fiscal uncertainties.
Key Takeaways
- 1.The Ministry of Finance (MOF) is scheduled to auction approximately JPY300 billion of a new 40y JGB (JU19).
- 2.Absolute yield levels above 4% are likely to induce demand from investors focused on absolute income, despite recent market volatility.
- 3.Issuance has been significantly reduced, dropping from JPY700 billion in March 2025 to JPY300 billion per auction currently.
Table of Contents
- (1) Positives and negatives ahead of the 40y auction
- POTENTIAL POSITIVES
- POTENTIAL NEGATIVES
- Pre-auction comment
- OUTRIGHT LONGS
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Authors
Noriatsu Tanji
Securities
JU1930y JGB20y JGB
Themes
Auction SeasonalityGeopolitical and Fiscal UncertaintySupply/Demand Tightness
Regions
Asia PacificJapan