JGB's head into the close lower, but well......>

JGBS: JGB's head into the close lower, but well off session lows hit before the

lunch break. Initially risk on sentiment hit JGB's at the open pushing JBU7 down

to 151.01 session low, the August 24 high now support. From here futures bounced

and head into the close just off Tokyo session highs at 151.12.

- Weak industrial production data at the start of the session was ignored. The

Japanese MOF sold 3-Month and 2-Year debt, both sales were mediocre heading into

month end. Yields are richer than at the previous auctions thanks to the flight

to safety seen over the past weeks on North Korea geopolitics and US political

concerns. The 2-Year debt stopped out at -0.149% from -0.115% last time out

(July 27), while cover dropped to 4.965 from 5.3346.

- The U7/Z7 roll has tightened slightly over the session, last at 0.20 from 0.22

at the start of the week.

- Yields are mixed, the futures sensitive 7-10 Year sector seeing yields rise

slightly, 10-Year yield last up 0.2bp at 0.010%, while the rest of the curve

sees yields slip slightly. Markets await the BoJ's Sept Rinban programme at

0900BST/1700JST.