Japanese yields edged lower on Friday, with....>

JGBS: Japanese yields edged lower on Friday, with the 4-20 Year sector of the

curve outperforming.

- The bid in Japanese paper came despite the BoJ's decision to reduce the size

of its purchases of JGBs with 3 to 5 years until maturity in its Rinban

operations to Y300bn from Y330bn previously. Elsewhere, the sizes of the 1-3 &

10-25+ Year purchases were left unchanged in the Rinban operations. Reaction to

the change was limited, as it had been telegraphed by some.

- Looking at the breakdown of the Rinban operations, the 3-5 Year bucket's offer

to cover ratio ticked up to ~3.4 from ~2.9, although it was the 25+ Year

bucket's offer to cover ratio that provided the biggest swing, as it fell to

~3.3 from ~4.2.

- The BoJ decision is set to dominate the docket on Friday. No change is

expected, focus is on the presser with Kuroda very aware of the risks

surrounding miscommunication. There will likely be questions regarding Rinban

ops at the press conference. The BoJ has trimmed the 3-5 & 5-10 Year buckets

since the April decision.