Modest risk-off flows pushed the Nikkei 225....>

JGBS: Modest risk-off flows pushed the Nikkei 225 away from the early highs,

with the benchmark closing the morning session 0.2% lower, supporting JGBs. JGB

futures operated in a tight range this morning, going into the lunch at

unchanged levels. Yields out to 10-Years trade modestly softer, with 20-Year

plus paper underperforming slightly, facilitating some modest twist steepening.

- Comments from BoJ's Amamiya revealed little new, with a focus on demographics.

- The BoJ left the size of its 5-10 Year Rinban ops unchanged today, offer to

cover ratio 2.21 (prev. 3.28). MNI understands that the BoJ will likely consider

reducing the frequency of its purchases of JGBs with a remaining life of 5-10

years to 4 times monthly from the current 5 as early as from next month.

However, the BoJ will exercise caution when considering the timing of reducing

the frequency of its purchases of those JGBs, as they have set the 10-Year yield

as a policy target & because the risk of global financial market volatility

persists. If the BoJ reduced the frequency of JGB bond buying with a remaining

life of 5-10 years to 4 times monthly, the scale of its purchase per operation

is expected to be increased to around Y500bn from the recent Y430bn.