JGB's head into the close slightly higher,.....>

JGBS: JGB's head into the close slightly higher, but way off session highs seen

at the start of the afternoon session. JGB's ignored the strong GDP data earlier

in the session and rose throughout the morning to touch 151.05, the highest

since Monday. Sources note that the drop in USD/JPY basis swaps which supported

the auction yesterday are likely to continue to support demand for JGB's and

dampen appetite for UST's. Volumes were thin on the session with just 11.6k

contracts heading into the close, compared to 77k on Thursday. The Nikkei rose

313 points on the session, opening higher and rallying throughout the session.

- The BoJ bought JGB's in the 1-5 and 10+ Year sectors, all sizes unchanged from

the previous operation. There was a big jump in the BoJ purchase of bills which

jumped to Y1.25tln from Y750bln last week. The operations were taken down

smoothly with higher spreads (lower prices) and lower bid/cover.

- JGB yields fell across the curve, the curve steepening as the long end sees

heavy buying after the strong 30-Year auction yesterday. 10-Year yield down

0.4bp at 0.051%.