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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Authors
Gen Taniguchi
Securities
JX8930y ASW
Themes
Fiscal Expansion RiskSupply/Demand Improvement
Regions
Asia PacificJapan
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