JGB's weaker across the board, futures.........>

JGBS: JGB's weaker across the board, futures retracing the majority of the rally

seen on Wednesday. JGB's fell alongside UST's, decent selling from real money in

TY spilling over into JGB's. A weaker yen after several dovish cues during the

session on Wednesday saw the yen weaken which helped support the Nikkei and

heaped extra pressure on JGB's. Nikkei 225 closed up 387 points at 23,486, the

first gain in 7 days. JGBs saw a brief bid after the strong auction, but this

was faded into the European open.

- The MOF sold 10-Year debt, the auction saw good demand, the BoJ's recent

actions (increasing 3-5 Year purchases on Jan 31) affirmed the many dovish

signals from the Bank, supporting the BoJ trade (buying low and selling higher

to the BoJ) supported the auction. Also supportive of the auction was the fact

that the BoJ are committed to maintaining the yield range for the 10-Year sector

in particular, the sector is good value on the curve within this range. The sale

was covered 4.584x (prev. 3.742x) at an average yield of 0.088%.

- Yieds higher, curve twist flattening slightly, 10-Year yield the outperformer

up 1.2bp at 0.097%, 2-/40-Year spread 0.3bp tighter.