JGB's higher in early trade after futures......>

JGBS: JGB's higher in early trade after futures sold off overnight alongside

UST's. The sell off was led by the belly of the curve, the 5-Year sector also

well offered after a slightly weaker result in the BoJ purchase operations.

Sources noting some 5-Year sellers vs the future. Long end firmed despite the

30-Year auction today, demand is expected to be strong for the issue with

sources noting real money accounts likely to have heavy takedown. Some widening

in USD/JPY basis swaps ahead of pricing of multi part samurai tranche pricing

from BPCE (French banks). 

- JGB outlook Barclays: "Today could see sellers initially take the upper hand

around the superlong end prior to the 30y auction after USTs sold off overnight.

We expect the auction (JX57) to clear smoothly, assuming yields near current

levels, returns on FX-hedged USTs looking sluggish and only a few months

remaining until the end of the fiscal year, the auction should spur a certain

level of demand from life insurers and other real money accounts, as in the case

of last week's 40y auction. However, any move to chase prices higher could be

limited by concern about rich relative valuations."