PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y700bn of 30-Year JGB's

opening JB#64. The MOF last sold 30-Year debt on Sep 5, the auction drew cover

of 3.450x at an average yield of 0.140%, average price of 107.41, high yield of

0.144%, low price of 107.30, with 53.1585% of bids allotted at the high yield.

- The benchmark 30-Year yield sits ~30bp off the cycle lows at 0.386% at

writing, ~5.0bp off the recent peak. The BoJ's desire to steepen the yield curve

(expressed via verbal guidance from Gov Kuroda & adjustments to the Bank's

Rinban purchase programme) has been the major catalyst for the move away from

lows, even as the Bank flagged the potential for a fresh round of easing later

this month. The global risk backdrop/monetary easing trend provides some

supportive inputs to supply, but the aforementioned BoJ preferences still

warrant some caution. The fact that this round of supply represents the opening

of a line may also provide some support in terms of demand.

- The 30-Year ASW spread sits just shy of its 3-Month peak.

- The 20-/30-/40-Year fly sits in the middle of its 1-Year range.

- Results due at 0435BST/1235JST