/JAPAN/AGBS: TD's Prashant.........>

US TSYS/RESEARCH: /JAPAN/AGBS: TD's Prashant Newnaha said Japan's MoF data

released three weeks ago "showed Japanese bond buying picked up in June and

accelerated in July, placing Japanese investors net long foreign bonds for the

first time this year."

- He added that "following a significant sell down of Aussie debt in June, we

suspect Japanese interest in Aussie sovereigns is likely to be limited given 1)

the current level of the AUD and 2) FX hedged yields on 10yr ACGB and 10yr USTs

are virtually the same."

- He added that "data for June by geography showed Japanese investors were most

net short OATs and USTs, and most long bunds but positioning thin amongst other

sovereigns YTD. Based on investor data for July, we estimate that Japanese

accounts are now net long USTs for the first time this year."