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

JGBS: JGB's head into the close slightly lower having endured another fairly

uneventful session. JGB's opened slightly slower, the sell off coming after the

US agreed to extend the debt ceiling by 3-months, this prompted risk on trade in

Asia and saw the Nikkei 225 open some 100 points higher. JGB's caught a bid

briefly after reports from the South Korean PM that they expected a missile

launch from North Korea on September 9, Founding Day in Korea. This proved short

lived and decent offers at 151.29 (session high) saw prices gradually trend

lower into the auction.

- The 30-Year auction was weak, the auction of the new issue drew a yield of

0.832%, a high yield of 0.841%, covered 3.671x (down from an 18-month high of

3.901 at the August auction) while the low price was some 0.15 below the

estimate and the spread widened to 0.21 (prev. 0.10). This saw JGB futures sell

off slightly; yields on the generic 30-Year up 1.1bp on the session, 20-Year

yields up 0.3bp on the session but dropped as investors sold 30's in favour of

the carry/roll in the 20-Year sector. 10-Year yield last up 0.6bp at 0.018%. The

weak auction saw yields outperform swaps in the long end.