### POV: Market conditions suggest.............>

JGBS: ### POV: Market conditions suggest continuance of buying in super-long

sector, despite the BoJ reduction in purchases in 25+ Year sector. 

- Buying in the super-long end has already been spurred this week by talk that

the Ministry of Finance are considering reducing issuance in 30- and 40-Year

JGB's. This is said to be in response to widening differentials between coupon

rates and long-term rates, especially as the global flattening trend pushes the

Japanese yield curve away from the BoJ's desired slope. 

- Other factors that support a bid include Y16.7tln of redemptions across the

maturity spectrum in December, especially with only Y800bln issued in December

(30-Year auction on Dec 7). Of these redemptions around Y1.2tln will go to life

insurers. JPY hedged treasury yields have declined recently which could induce

lifers to avoid other asset classes and stick with JGB's, MNI sources note that

a 30-Year yield over 0.80% is seen as attractive. 

- Also, November is anecdotally a large index extension month and the Y10bln

reduction  in BoJ Rinban ops is smaller than the reduction in other sectors that

bounced back after an initial selloff.