A reminder that late yesterday saw the MoF.....>

JGBS: A reminder that late yesterday saw the MoF disclose that the shortfall

surrounding the latest supplementary budget would be financed by paper out to

5-Years, triggering modest underperformance in the 3-4 Year sector today. While

long end outperformance was noted, even with a luke-warm 20-Year auction seen,

as focus fell on the shorter dated nature of the MoF's plan to finance the

supplementary budget. This allowed futures to rally from overnight levels, but

the contract has edged back from highs in the wake of that auction, coupling

with the cooling of the Kim rumours (mentioned elsewhere) leaving futures -5 on

the day.

- Swaps trade a little more mixed into the close, underperforming in the wings

in the afternoon.

- There was some focus on comments surrounding payments re: the delay of the

Olympic games, with Chief Cabinet Secretary Suga refuting earlier reports which

suggested that Japan will pick up the costs surrounding the delay.

- Recent comments from the BoJ pointed to a generally sound financial system on

the whole, although pockets of risk were identified.