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

JGBS: JGB's head into the close lower, futures down 12 ticks at 150.31. After

treading water for the morning session a sharp sell off commenced after lunch.

The move coincided with a sell off in bonds globally, UST's dropped to session

lows, Aussie bonds extended their decline after being pressured early in the

session as the market saw some duration headging in preparation for the Nov 2029

sale via syndication. ACGB sale was strong, total A$9.3bln covered approximately

2.26x with an 8bp yield concession over OTR 10-Year, but this did not see the

usual post auction firming and global bonds extended losses.

- The BoJ bought >1 Year, 1-3 Year and 3-5 Year JGB's all sizes unchanged from

the previous operations. Offer/cover ratios were in line with the previous

operation, spreads rose across all maturities.

- Yields higher across the curve, led by the futures sensitive 7-Year sector up

1.1bp at -0.004%, 10-Year yield up 0.6bp at 0.087%. Market looks ahead to

tomorrow's 30-Year auction, expectations for a strong auction limiting sales in

the sector. 10-Year LCH/JSCC swaps crept slightly higher, indicating selling

activity from foreign accounts.