JGB's head into the close up 9 ticks at........>

JGBS: JGB's head into the close up 9 ticks at 150.49, but broadly unchanged from

opening levels. Japanese markets were playing catch up after being closed on

Friday for Mountain Day and so were quick to price in US/North Korea tensions.

- JGBs initially dipped early on after a strong GDP readings, the first run of 6

consecutive quarters of growth for 11 years. Headline Q2 prelim GDP rose 1.0%

against an estimate of 0.6%. An important point is that the GDP deflator is

starting to rise slightly, the latest print rising to -0.4% from -0.8%. While

still denoting weakness in the inflationary environment this is a move in the

right direction and will provide some encouragement to the BoJ in their attempts

to stoke inflation.

- The move lower was reversed heading into the lunch break as US/North Korea

tensions continue to weigh.

- Yields dropped from the open, tracking the moves in US tsys late last week,

but moved in a narrow range in quiet trade ahead of the BoJ's two scheduled

buying operations later this week. 10-Year yield last down 0.5bp at 0.055% with

sources noting further downside will likely be limited