PREVIEW: The Japanese MOF will today...>

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

opening JB#172. The MOF last sold 20-Year debt on March 12, the auction drew

cover of 3.692x at an average yield of 0.248%, average price of 100.98, high

yield of 0.252%, low price of 100.90, with 97.2897% of bids allotted at the high

yield.

- Outright 20-Year yields recently touched their cheapest level in ~1 Year, but

have edged away from recent cheaps (albeit marginally), after the MoF disclosed

that the shortfall surrounding the latest supplementary budget would be financed

by paper out to 5-Years.

- The BoJ still looks to foster a steeper yield curve, but the lack of fresh

super-long issuance may outweigh that matter and foster demand, especially given

the recent turn of the FY. 20-Year ASW spreads sit in the middle of the YtD

range, with the 10-/20-/30-Year fly a touch shy of the YtD peak, after a steady

recovery from the YtD trough in Mid-March.

- Results due at 0435BST/1235JST