PREVIEW: The Japanese MOF will today...>

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

reopening JB#356. The MOF last sold 10-Year debt on October 1, the auction drew

cover of 3.424x at an average yield of -0.158%, average price of 102.62, high

yield of -0.130%, low price of 102.33, with 6.1227% of bids allotted at the high

yield.

- 10-Year JGB yields last ~-0.090%, ~6.8bp higher than the prevailing avg. yield

at last month's poorly received 10-Year auction, with external matters & the

BoJ's desire to steepen the yield curve via its Rinban ops pushing yields higher

in the last couple of sessions. This came after the BoJ's dovish forward

guidance provided some support for JGBs at the back end of last week.

- Reports suggest primary dealers hold neutral positioning in 10s.

- Daiwa believes that "the possibility of the BoJ trimming purchases in the 5-10

Year zone appears low in the near term. In addition, the on-the-run JB#356 is

unlikely to be excluded from the target list in the BoJ's purchase operations."

- 10s sit at the cheaper end of their recent range vs. ASW.

- Results due at 0335GMT/1235JST.