PREVIEW: The Japanese MOF will today...>

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

re-opening JB#12. The MOF last sold 40-Year debt on September 25, the auction

drew cover of 2.690x at a high yield of 0.435%, low price of 102.36, with

46.0000% of bids allotted at the high yield.

- Outright 40-Year yields sit ~35bp off the cycle low at 0.483% last, aided by

the lack of fresh BoJ easing in recent months, Rinban adjustments & BoJ Governor

Kuroda's verbal intervention to steepen the curve (back in Sep). FY19/20 budget

matters may provide some headwinds for supply, especially given the freshness of

yesterday's report re: increased 40-Year issuance in FY2020 (amounting to

several hundred bn yen). Several desks point to nothing in the way of notable

short positioning in the sector.

- The 5-/40-Year & 30-/40-Year yield spreads sit around the middle of their

recent ranges, but are of course still flat in historical terms. The BoJ has

stressed that it wants the yield curve to steepen to promote the health of the

financial sector.

- Results due at 0335GMT/1235JST