JGB's head in to the close lower, declining....>

JGBS: JGB's head in to the close lower, declining after the Japanese Labour

Thanksgiving holiday yesterday. Futures dipped at the open after comments

regarding lack of demand for 10-Year JGB's emanated from the MOF meeting with

dealers on Wednesday. The move lower was accelerated after the BoJ cut purchase

operations in the 25+ Year sector by Y10bln.

- The cut comes after broad flattening of the yield curve, contrary to the BoJ's

desired slope and scarcity issues after MOF plans to reduce long end issuance in

the next fiscal year. The change had the desired effect and the curve steepened,

2-/30-Year spread last 1.7bp wider. The initial sell off was pared as players

bought on some bargain hunting, but weak operation results that showed higher

offer/cover ratios and a significant widening in spreads.

- Data was ignored in the session the flash November Nikkei Manufacturing PMI

rose to 53.8 from 52.8, while the final September Leading Index fell to 106.4

from 106.6, and Coincident Index rose to 116.2 from 115.8.

- Futures last down 13 ticks at 151.02, 10-Year yield last up 1.1bp at 0.033%.