PREVIEW: The Japanese MOF will today...>

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

re-opening JB#355. The MOF last sold 10-Year debt on August 1, the auction drew

cover of 3.762x at an average yield of -0.152%, average price of 102.53, high

yield of -0.150%, low price of 102.51, with 1.7771% of bids allotted at the high

yield.

- Outright yields look rich on a historical basis, sitting within touching

distance of the cycle lows, last -0.260%, with the BoJ recently attempting to

steepen the yield curve, cutting its purchase sizes of 5-10 Year JGBs on Friday

& 10-25 Year JGBs on Monday. However, this isn't a black & white case, global

demand for safe haven assets coupled with the impulse towards deeper monetary

easing could continue to force yields lower. 10-Year paper appears to be

appropriately valued on the curve & offers the most attractive carry & roll on

the curve, just. 10-Year paper has cheapened from recent richest levels in ASW

terms, but still looks quite dear on that measure. There appears to be little

demand for short covering at the auction, based on various dealer surveys.

- Results due at 0435BST/1235JST