Mizuho previews the upcoming JPY 300bn 40-year JGB auction, suggesting that high absolute yields (>4%) and supportive seasonal cycles favor outright long positions despite geopolitical and fiscal uncertainties.
Key Takeaways
- 1.The Ministry of Finance (MOF) is set to auction approximately JPY 300 billion of the new 40-year JGB (JU19), with supply halved since March 2025.
- 2.Current 40-year yield levels exceeding 4% are viewed as attractive given Japan's estimated 0.5% potential growth rate.
- 3.Historical seasonality in late May tends to be supportive for 40-year JGB auctions as duration extension trades offset early-month upward pressure.
Table of Contents
- Positives and negatives ahead of the 40y auction
- POTENTIAL POSITIVES
- POTENTIAL NEGATIVES
- Pre-auction comment²
- OUTRIGHT LONGS
- Important Disclosure Information
- Analyst Certification
- Disclaimer
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Authors
Noriatsu Tanji
Securities
JU1930y JGB
Themes
Auction Supply DynamicsSeasonal Yield CyclesGeopolitical Risk and Fiscal Uncertainty
Regions
Asia PacificJapan
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