JGB's head into the close higher on Monday,....>

JGBS: JGB's head into the close higher on Monday, a slight bid in the morning

session was followed by some decent gains in the afternoon. Volumes were thin,

however, around 10k contracts changing hands in futures compared to average of

around 40k. 

- Early in the session trade balance figures were released, the trade balance

saw a surplus of Y113.4bln against estimates of a Y56.5bln deficit, exports rose

above forecasts posting their 12th straight rise, imports rose 17.2% just shy of

forecasts. The Tankan survey was also released. Inflation expectations edged up,

but BoJ officials still believe that there will be a challenge to overcoming the

deflationary mindset.

- The BoJ bought 1-10 Year JGB's, results were slightly softer, but broadly

in-line with the previous ops. The MOF sold 1-Year bills, the results were

strong with cover rising to 5.388 from 3.902, strength in JGB's was seen post

auction which saw JGB futures hit session highs of 151.01. Futures last up 10

ticks at 150.98. Yields mostly lower across the curve, curve steepens slightly

with some short end concession ahead of the 3-Month bill auction on Wednesday.