JGB's head into the close lower, yield curve...>

JGBS: JGB's head into the close lower, yield curve twist flattening. JGB futures

initially opened higher, this followed a rise in US tys on Friday after Jackson

Hole comments from Yellen, and a speech from BoJ Governor Kuroda at Jackson Hole

where he affirmed the BoJ's easy monetary policy stance and said hitting the

inflation target remains a distant prospect. However Kuroda did confirm the

recent trend that the BoJ would seek to reduce purchases of JGB's under YCC.

Kuroda noted that with the declining number of bonds in the market purchases

should exert more of an effect.

- The BoJ kept purchases in 1-3 & 3-5 Year zones unchanged, cover rose in both

maturities. Comments from Kuroda and higher bid/cover have intensified

speculation that the BoJ could reduce later this week at the final op, before

announcing the September plan on Friday.

- After opening higher in the morning JGB's took a leg lower in the afternoon

after the purchase results were announced with higher covers. The long end saw

buying still, even ahead of the 15-40 Year liquidity auction tomorrow. 10-Year

yield last up 0.2bp at 0.018%, 30-Year yields down 0.1bp at 0.839%.