JGB futures have stuck to a tight range on.....>

JGBS: JGB futures have stuck to a tight range on Monday, with risk-off flows,

JPY strength and a pullback in the Nikkei 225 all lending support to futures.

The long end of the curve has underperformed, promoting some steepening in

afternoon trade after a less than inspiring liquidity enhancement auction for

off the run 15.5-39 Year JGBs saw the cover ratio moderate, as the average

spread moved into positive territory.

- This comes after the BoJ had to trim the size of its 10-25 Year JGB purchases

earlier this month owing to the flatness of the curve & suppressed outright

yield levels, which triggered speculation of additional tweaks to Rinban ops.

That hasn't stopped the latest round of longer dated auctions from coming in on

the firm side, with many suggesting that lifers have found themselves

underweight super-long JGBs as we head towards FY end. Today's liquidity

enhancement auction may highlight a preference for on the run paper at lifers.

- BoJ Governor Kuroda offered little new in his latest address.

- Focus tomorrow moves to BoJ Rinban operations covering 1-10 Year JGBs and an

address from BoJ's Kataoka.