JGB's closed mixed, futures last up 1 tick.....>

JGBS: JGB's closed mixed, futures last up 1 tick at 150.89. JGB's rose at the

open in Tokyo after dipping slightly in overnight trade. There was some buying

after the release of the Tankan survey, the headline index rose to 25, slightly

above estimates of 24. The results were firm overall but companies were still

cautious about raising prices which cast further doubt on inflation.

- There was some buying heading into the BoJ purchase operation, the BoJ bought

10+ Year JGB's all sizes unchanged from the previous ops, but they sharply

reduced T-Bill purchases to Y250bln from Y1.25tln last week amid tight

supply/demand conditions in the sector as wider USD/JPY basis swaps attracts

foreign buyers. Offer/cover rose slightly at the ops which saw a sell off in the

afternoon. Futures hit session lows of 150.84, the Alternating hourly sup/res

before bouncing, reports that the BoJ's recent rhetoric warned against further

easing rather than withdrawal of stimulus failed to have a dramatic effect on

JGB's but USD/JPY rose slightly before dropping again.

- Yields mixed, 10-Year -0.1bp at 0.049%, 20-Year seeing some heavy buying after

decent auction of the new issue 162 yesterday, -0.8bp at 0.0572%.