A fairly uneventful session for JGB's with.....>

JGBS: A fairly uneventful session for JGB's with quiet news flow & thin volumes

due to Obon holidays. JGB's initially gapped lower and then extended the sell

off at the open as Japanese markets caught up with the global stock rally after

selling off on Monday, which was itself a catch up with the Friday global sell

off in stocks after Japanese markets were closed for Mountain Day. Having

finally seemed to have caught up with the rest of the world Japanese stocks

gapped higher at the open and accelerated the move up as the yen weakened.

- Strong selling seen on the break of 150.50 pushing JGB futures down to lows of

150.47, futures then caught a bid heading into the lunch break to close the

morning unchanged at 150.50. This move higher was extended in the afternoon

session with consistent buying seen in clips of 100 from 150.50 through 150.57.

- Yield curve bull steepened, the short end seeing buying despite the 5-Year

auction on Thursday. Markets now look ahead to the BoJ purchase ops of 5-40 Year

debt tomorrow and 5-10 Year debt Friday. 2-Year down 0.7bp at -0.116%, 10-Year

down 0.5bp at 0.05% Swaps outperformed yields in the short end, the 2-Year in

particular rising 0.2bp to L-14.8bp.