A sense of calm returned to the JGB market.....>

JGBS: A sense of calm returned to the JGB market in yesterday's morning session,

with no real concession observed ahead of 40-Year supply (outside of that seen

on Monday), despite some concerns surrounding demand at the auction.

- Despite a lower than previous cover ratio at 3.302 vs. 3.923, the auction

provided a lower than expected high yield at 0.8800% vs. 0.8950%, which put a

fresh, albeit modest, bid into JGB futures and the super-long end of the curve.

This was before the super-long end sold off as worry re: the potential for BOJ

policy tweaks at next week's MonPol decision took hold, leaving the 5-/40-Year

JGB spread 4.7bp steeper on the day.

- Today has seen the Nikkei run a story noting that "the Bank of Japan is

unlikely to make changes to its ultra-loose monetary policy at least until

October, five key BOJ watchers believe, despite talk that growing concern over

the side effects of prolonged easing could prompt action next week." Some even

believe that more easing is on the table to stoke price growth.

- From a technical perspective bulls look to the 200-DMA (150.74) which capped

Monday's rally. Support is noted at Monday's low, the Feb 01 high (150.36)