PREVIEW: The Japanese MOF will today...>

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

reopening JB#355. The MOF last sold 10-Year debt on Jul 2, the auction drew

cover of 3.920x at an average yield of -0.139%, average price of 102.42, high

yield of -0.137%, low price of 102.40, with 93.8948% of bids allotted at the

high yield.

- The BoJ's willingness to act if needed will likely keep a floor on JGB yields

for the time being, barring any significant developments. The lack of

adjustments in the BoJ's Rinban plans for August may provide some additional

support, although there appears to be little demand for short covering from

dealers ahead of today's supply.

- The line looks relatively fair on an ASW basis.

- The 2-/10-Year yield spread continues to hover just above the recent cycle

lows.

- Only 20-Year paper offers a more attractive carry and roll proposition than

10s at present.

- Results due at 0435BST/1235JST.