PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y900bn of 20-Year JGB's

opening JB#170. The MOF last sold 20-Year debt on September 18, the auction drew

cover of 3.476x at an avg. yield of 0.205%, avg. price of 101.70, high yield of

0.210%, low price of 101.23, with 20.3703% of bids allotted at the high yield.

Sep's 20-Year supply wasn't well received. The line will carry a 0.3% coupon.

- Benchmark 20s have stuck to a range of ~0.15-0.27% since the Sep auction, and

sit around the cheaper end of that range, last yielding 0.251% after some

concession yesterday, with negative Brexit risks on the backburner, while

Sino-U.S. trade negotiators are seemingly working towards a "phase 1" agreement.

- Views on dealer shorts are mixed. Several dealers note that the line could be

excluded from the next round of 10-25 Year Rinban ops, a further headwind for

the wavering "BoJ trade" i.e. buy at auction, sell back to BoJ. The fact that it

is a new line should generate some demand, carry/roll dynamics vs. 30s also seen

as a +ve. No outright convictions on the curve, but the zone has cheapened vs.

swaps. Event risk i.e. next week's BoJ & Fed decisions provide risks to supply.

- Results due at 0435BST/1235JST