JGB's continued their downward move............>

JGBS: JGB's continued their downward move yesterday, and yields rose across the

curve. The move over the past 2 days has reversed the flattening seen after the

MOF announced a cut to long end supply in 2018, 10-/40-Year spread now 0.8bp

wider in the past month after flattening 5.5bp during December. Yesterday the

10-Year yield touched the highest levels since July 2017 at 0.88%. From a

technical perspective this brings 0.10%, the BoJ's highest tolerance under YCC,

into focus. Notably LCH/JSCC basis spreads have continued to widen as foreign

players continue to pay in the long end illustrating a divergence of

expectations from domestic/foreign accounts.

- JGB's last up 9 ticks on the day at 150.44, 10-Year yield down 0.9bp at 0.076%

- JGB View Barclays: "Today could see the rise in JGB yields take a breather

given the slight overnight buyback in bond futures driven by risk-off flows,

along with today's BoJ buying operations for 1-5y and 5-10y issues. Given the

current strong upward pressure on yields, we expect the size of those operations

to be unchanged."