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#358. The MOF last sold 10-Year debt on April 2, the auction drew

cover of 4.193x, an avg. yld of 0.023%, avg. price of 100.76, high yld of

0.024%, low price of 100.75, with 83.0105% of bids alltd at high yld.

- The line last yields ~0%, in the centre of the BoJ's desired range. The need

for a 2nd supplementary budget has been evident in recent days, with

participants cognisant that any increase in issuance could be pushed further out

the curve after the 1st supplementary budget focused more on short-dated/belly

issuance, although it is difficult to gauge what the budgetary requirements may

be. Several desks point to the likelihood of decent short covering demand at

today's auction. BoJ Rinban ops will see slightly larger buying in the 5-10 Year

sector in May vs. April, which could also prove supportive for auction.

- The 5-/10-/20-Year JGB fly sits towards the lower end of the YtD range.

- 10-Year JGBs look a smidge dearer in ASW terms vs. the most previous auction,

but that shouldn't provide any impediment to demand, given how marginal it is.

- Results due at 0435BST/1235JST