JGB's head into the close higher, futures......>

JGBS: JGB's head into the close higher, futures last up 8 ticks at 151.05. JGB's

gained from the open on some jitters over reports of the latest ICBM launch from

North Korea. The reaction to this was limited though, markets far more sanguine

compared to the previous launches.

- Futures moved in a range throughout the morning session, the BoJ purchased

JGB's in 5-10, 10-25 and 25+ Year sectors, all sizes unchanged. When the results

of the purchase operations came through JGB's caught a bid on the strong

results. Offer/cover ratios slip from the previous operations while spreads

rise, the 25+ Year sector saw cover rise to the highest since July despite the

reduction in the sector.

- Data earlier in the session was ignored, retail sales printed -0.2% (est.

-0.4%) first decline in 12 months, METI maintained their upbeat assessment.

- Buying in the long end saw the curve bull flatten, 10-Year yield last down 1bp

at 0.03%, 2-/30-Year spread last 1.2bp flatter. Decent activity in swaps,

JSCC/LCH 10-Year  was flat at 3.50%, suggesting foreign paying subsided

somewhat. Sources note decent receiving interest in 30-Year falling 0.875bp.