PREVIEW: The Japanese MOF will today...>

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

re-opening JB#172. The MOF last sold 20-Year debt on April 21, the auction drew

cover of 3.582x at an average yield of 0.335%, average price of 101.21, high

yield of 0.340%, low price of 101.10, with 16.5349% of bids allotted at the high

yield.

- Line last yields ~0.34%, ~3bp off YtD cheaps. Prospects of another notable

increase in JGB issuance in the immediate term, owing to fiscal needs, coupled

with questions over the health of the econ, cloud the waters ahead of auction. A

continued lack of liquidity in the super-long end will likely support demand for

primary issuance, but the BoJ's want for a steeper curve provides at least some

offset, as does the relatively heavy issuance schedule. A reminder that this

line is currently excluded from BoJ Rinban ops. The 10-/20/30-Year fly sits

closer to YtD highs than YtD lows, but is comfortably within the range witnessed

over the last month. 20s are some way off recent cheaps vs. swap/in ASW terms,

but still look cheap vs. levels seen pre-March vol.

- Results due at 0435BST/1235JST