JGB's head into the close mixed, futures are...>

JGBS: JGB's head into the close mixed, futures are up 1 tick at 150.80 but

declined throughout the session after opening at 150.87. Futures slowly ground

their way lower in the morning session in thin volumes ahead of the 20-Year

auction, a brief bid after the strong auction gave way to more selling into the

close.

- In cash buyers initially took the upper hand in the superlong end as risk off

flows were evident early on. However the selloff began early in the session as

Japanese stock indices snapped their losing streak to post decent gains on the

day. The Nikkei 225 last up 322 points.

- The 20-Year auction saw strong results, cover rose to 4.13 from 4.05

previously and the low price stopped out at 100.45 against estimates of 100.40.

The auction was supported by the 3.875bp decline in USD/JPY basis swaps over the

past month. The strong results initially saw a swathe of buying in the sector

before yields jumped to session highs on profit taking.

- 10-Year yield bucking the trend, down 0.6bp at 0.035%. Swaps outperformed in

the short end, 7-Year cheapening 0.5bp to L-21.1bp.