JGB's closed higher on Friday, and the saw.....>

JGBS: JGB's closed higher on Friday, and the saw the curve twist steepen beyond

the belly. The BoJ conducted purchase operations in the 1-5 and 10+ year zones

and reduced the purchase of 1-3 Year debt by Y30bln, the first reduction in the

sector since April, and increased T-Bill purchases to Y500bln from Y100bln.

Analysts note that these moves are likely supply/demand driven as the BoJ risks

undershooting their target for bill purchases. Yields in 3-month bills fell to

the lowest levels in 8 months, pushing investors down the yield curve and

driving 2-Year yields lower. The changes in the ops mean that the BoJ can hit

their bill purchase target without signalling intention to drive yields lower.

- As a note the market could be quiet this week, the US Thanksgiving Holiday

falls on Thursday this week which could keep volumes thin, and the MOF will meet

with dealers on Wednesday and investors on Friday with markets hoping that hints

of lower 2018 issuance will be clarified.

- JGB futures open higher but quickly drop to session lows at 150.90, last at

150.95. Move lower comes despite weaker than expected trade balance figures and

stronger yen.