PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y2.1tn of 10-Year JGB's,

representing a re-opening of #JB354. The MOF last sold 10-Year debt on May 08,

the auction drew cover of 4.444x at an average yield of -0.060%, average price

of 101.59, high yield of -0.058%, low price of 101.57, with 36.0139% of bids

allotted at the high yield. Outright 10-Year yields are threatening a clean

break below -0.1%, even after adjustments to the BoJ's Rinban purchasing plan

for June (issued on Friday). Worth remembering that the plan revealed that the

BoJ will not conduct 5-10 Year Rinban ops on the day following a 10-Year

auction, this means that their will be greater uncertainty involved in the "BoJ

trade" i.e. buying at auction to sell back to the BoJ the next day.

- 10-Year paper sits towards the cheaper end of its 12-month range in ASW terms.

- The 5-/10-/30-Year yield fly hovers a couple of basis points shy of the recent

highs and looks elevated based on 12-months of history, with the 10-/30-Year

yield spread hovering around cycle lows. In carry and roll terms, the benchmark

20-Year JGB offers a slightly more attractive prospect than benchmark 10s.

- Results due at 0435BST/1235JST.