JGB's fell yesterday, downside emanating.......>

JGBS: JGB's fell yesterday, downside emanating initially from weakness in UST's

and then from a reduction in <1 Year JGB purchases by the BoJ. The announcement

of the Y20bln reduction to Y50bln in <1 Year JGB's was ignored at first, but as

a result of the decrease the operations were weak and spreads widened

significantly which accelerated the decline in JGB's. The long end sold off

ahead of the 40-Year auction today.

- JGB's higher in early trade, last up 9 ticks at 151.02. JGB's supported by

risk off sentiment in the US, and comments from BoJ's Kataoka and Gov Kuroda.

- JGB Opening Call Barclays: "Today could see buyers take a slight upper hand

overall ahead of the 40y auction given the deterioration in risk sentiment and

slight rise in USTs overnight. We expect the 40y JGB auction (JU10) to clear

smooth assuming yields near current levels (WI close on 27 November: 0.99%).

Although levels are somewhat lower than the average at the last auction

(1.015%), we believe the issue is likely to attract a certain level of demand

even below 1% given expectations for 40y JGB issuance to be reduced in FY18 and

the big extension at the end of the month."