30-Year JGB Auction Preview

Mizuho previews the upcoming 30y JGB auction, noting that while high yields and future supply reductions are supportive, fiscal risks from the February 8 election create uncertainty. The analyst recommends entering via asset swaps rather than outright positions to mitigate volatility.

Key Takeaways

• 1.The upcoming 30y JGB auction (JX89) for ~JPY700 billion is significantly influenced by the February 8 lower house election and fiscal expansion concerns.
• 2.Yields remain historically high at 3.635%, which may attract income-minded investors despite recent volatility.
• 3.Asset swaps (ASW) are recommended over outright entry to hedge against potential further interest rate rises following the election.

Table of Contents

• (1) Positives and negatives ahead of the 30y auction
• POTENTIAL POSITIVES
• POTENTIAL NEGATIVES
• Auction strategy²
• (2) Key charts

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