PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y1.0tn of 20-Year JGB's,

representing the opening of #JB166.

- The MOF last sold 20-Year debt on September 20, the auction drew cover of

4.032x at an average yield of 0.618%, average price of 97.91, high yield of

0.622%, low price of 97.85, with 13.0174% allotted at the high yield.

- The benchmark 20-Year yield has traded in a ~7.5bp range since the most recent

auction, last trading at 0.681%, ~2.0bp off the recent high.

- There will be continued interest in the sector after the BOJ trimmed the size

of its purchases of the 25+ Year JGBs back in Sep, culminating in it lowering

the upper & lower bounds for the size of its purchases in longer dated paper for

Oct, although most expect the Bank to leave the size of its 10-25 Year JGB

operations unch. for now (unless supply-demand conditions drastically alter).

- There appears to be short covering requirements in the sector, with relatively

attractive carry & roll adding an additional layer of support. That being said

the sector looks expensive vs. longer dated lines, on both z-spread & ASW terms.

- Results due at 0435BST/1235JST.