PREVIEW: The Japanese MOF will today...>

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

opening JB#171. The MOF last sold 20-Year debt on December 17, the auction drew

cover of 4.105x at an avg. yield of 0.286%, avg. price of 100.25, high yield of

0.289%, low price of 100.20, with 30.5611% of bids allotted at the high yield.

- 20-Year JGB yields have operated in an ~8.0bp range in the time since the Dec

auction, driven by global risk matters, namely tensions in the Middle East &

Sino-U.S. trade matters, last yielding 0.306%, ~2.0bp off range highs. Several

desks have pointed to a lack of short covering demand, although growing focus on

FY end portfolio flows could support demand over the next couple of months.

- The 10-/20-/30-Year JGB fly sits around the highest levels seen since 2018.

20s provide a slightly less attractive carry & roll prop. Vs. 10s, but are more

attractive than 30s on this basis. JGBs also have a broader investor base than

their longer dated counterparts, which could be magnified by the BoJ's desire

for a steeper curve, which has the potential to shift focal points for those

looking for duration exposure. That being said, the BoJ's want for a steeper

curve may provide a limit re: overall bidding. Results due at 0335GMT/1235JST