JGB futures ticked higher at the re-open,......>

JGBS: JGB futures ticked higher at the re-open, extending on their overnight

session gains as the Nikkei shed ~3.5% at one point.

- Rumoured state-based intervention to limit losses in the CNY allowed Chinese

stocks to turn green on the day, which seemed to limit additional risk off flows

elsewhere, with JGB futures moving back from best levels. The curve still sits

flatter on the day, although yields are generally off of lows.

- The swaps curve has also flattened, but swaps have mostly lagged the move in

JGBs, allowing some modest widening in spreads in the main.

- Focus on 30-Year supply in ~10 minutes time. 20-Year paper looks a little more

attractive than 30-Year based on ASW & z-spread perspectives, while 20-Year

paper also offers a more attractive carry & roll proposition. The recent round

of domestic lifer/pension fund asset allocation plans indicated a general

willingness to buy 30-Year JGBs if yields reach 1%. The sector's yields have

become competitive with French 10-Year OATs on an FX hedged basis for Japanese

investors, although the huge funds have indicated a willingness to pursue larger

uncovered bond holdings.