PREVIEW: The Japanese MOF will today...>

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

re-opening JB#356. The MOF last sold 10-Year debt on Nov 6, the auction drew

cover of 3.621x at an avg. yield of -0.099%, avg. price of 101.99, high yield of

-0.094%, low price of 101.94, with 80.6774% of bids allotted at the high yield.

- A combo of focus on fiscal stimulus & the BoJ's desire to steepen the JGB

curve has allowed JGB yields to track away from cycle lows, a move further

facilitated by hope re: a phase 1 Sino-U.S. trade deal. This will not guarantee

solid take up at the auction, as recent volatile post-10 Year auction price

swings may deter, although a lack of clarity re: the health of domestic & global

econs, and the elevated yield levels vs. recent auctions may stimulate demand.

- RV appears attractive vs. 20s, although duration absorption will be tested

over coming days with 30-Year supply due Thurs & 40-Year supply scheduled next

week, so some correction of this "cheapness" may take place in coming sessions.

- Desk reports point to no clear short covering needs among primary dealers.

- The 10-Year ASW spread sits at the top end of its recent range.

- Results due at 0335GMT/1235JST