A Record 5.84 Times Bid-to-Cover, at a Yield 13 Basis Points Lower Than the Last One
Japan sold JPY 700bln of 20-year paper this morning at a bid-to-cover of 5.84 times — a record, against 4.01 at the last auction and a 12-month average of 3.73 — and it cleared at an average yield of 3.7230 per cent, 13.3 basis points below the previous sale. The tail more than halved, 0.07 against 0.15. The story being told is that a yield spike lured buyers in; the clearing level says this auction went 13 basis points richer than the last one, so the narrative and the print describe different quantities, and a trader who merges them has the sign backwards. We are also refusing the word tail: one reader defines it as the gap between average and lowest accepted prices, which is a dispersion measure, not the when-issued comparison our own rulebook means, and with no when-issued level we will not call 0.07 a stop-through. The curve did the work — the 20-year fell as much as 6 basis points to 3.71 per cent, its lowest since 9 September, the 30-year eased to 3.970 and the 10-year rose to 2.920, flattening 20s against 10s by 7.5 basis points to 79. The auction average and the market level sit 1.3 basis points apart. Dollar-yen moved 15 pips. The Ministry of Finance's own result was not read.