JGB futures faded after yesterday's surge,.....>

JGBS: JGB futures faded after yesterday's surge, but have held above broken

resistance levels (the former YtD high), which allows bulls to continue to focus

on futures' all-time highs.

- Twist flattening crept into the space during the afternoon session, despite

the presence of a relatively soft liquidity enhancement auction (which saw the

cover ratio soften, yield spread turn positive, yield tail widen and % allotted

at high yield spread surge). The auction was highlighted as a potential risk

event ahead of tomorrow's BoJ Rinban operations, which represent the first round

of 5-25+ Year Rinban operations since the BoJ reduced the frequency of

operations for 10-25 & 25+ year paper in its June plans. There is of course the

potential that dealers are bidding the super-long end up to try and receive the

best price possible from the BoJ in tomorrow's operations.

- 10-Year yields continue to operate at suppressed levels, last -0.116%.

- Markets await an address from BoJ governor Kuroda later today, with wage data

due Friday.