30Y JGB Auction Preview: Lower House Election Focus

Mizuho Securities previews the 30y JGB auction, noting that while yields are historically attractive, fiscal risks surrounding the February 8 lower house election suggest a preference for asset swaps over outright longs.

Key Takeaways

• 1.The upcoming 30y JGB auction (JPY700 billion reopening of JX89) occurs amidst high yields and fiscal policy uncertainty following PM Sanae Takaichi's tax exemption pledge.
• 2.Mizuho recommends asset swaps (ASW) over outright longs to capture carry while limiting exposure to further potential rate climbs driven by election risks.
• 3.Supply conditions are expected to improve from FY2026, with the Ministry of Finance planning to cut monthly 30y bond offerings by JPY100 billion.

Table of Contents

• (1) Positives and negatives ahead of the 30y auction
• POTENTIAL POSITIVES
• POTENTIAL NEGATIVES
• Auction strategy
• (2) Key charts
• Important Disclosure Information
• Analyst Certification
• Disclaimer

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