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

JGBS: JGB's head into the close slightly higher. Futures last up 3 ticks at

150.93, after treading water in thin volumes during the morning session a decent

5-Year auction saw a bid in the afternoon session, futures touched session highs

of 150.95 before coming off slightly. Quiet trade in the JGB market ahead of key

central bank events later in the week and the BoJ meeting next week. 10-Year

yield last down 0.4bp at 0.047%.

- The auction was broadly in line with the previous sale, covered 4.38x (prev.

4.19) with a 0.01 tail.

- Yield curve opened flatter and the move continued throughout the session, the

long end is seeing some concession ahead of the 20-year auction on Thursday.

JGB's are expected to be supported due to Y16.7tln of redemptions in December

and only one auction (1-Year maturity) in December after this week. Sources note

at these yield levels the long end will likely benefit from flows, especially as

USD/JPY basis swaps continue to fall due to year end USD demand which has eroded

UST yields for Japanese investors.

- Data was ignored, PPI rose 0.4% on the month, above the 0.2% forecast.