PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y400bn of 40-Year JGB's

re-opening #JB12. The MOF last sold 40-Year debt on July 23, the auction drew

cover of 3.022x at a high yield of 0.425%, low price of 102.73, with 25.1445% of

bids allotted at the high yield.

- The line's yield sits at 0.400% at writing, ~30bp off the recent low.

- The auction comes on the back of curve steepening, facilitated by BoJ Gov.

Kuroda's warning shot re: the low level of super-long ylds & trimming of the

BoJ's purchases of 10+-Year JGBs. This may weigh on demand at the auction, with

caution apparent re: the potential for further Rinban adjustments, whether that

be in terms of size or the # of ops p/month (even though the BoJ now "only" buys

Y30bn worth of 25+ Year JGBs in each of its ops covering that area of the

curve). Also, worth reminding that the previous 40-Year auction was not well

received at a similar yield level. In terms of scheduling, super-long supply,

including enhanced liquidity auctions, could heavily outweigh BoJ Rinban buys in

the coming weeks. Ongoing global uncertainty & the recent yield back up may

provide some underlying demand. Results due at 0435BST/1235JST.