PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y500bn of 40-Year JGB's

opening JB#13. The MOF last sold 40-Year debt on March 26, the auction drew

cover of 2.658x at a high yield of 0.450%, low price of 101.79, with 30.5135% of

bids allotted at the high yield.

- Previous auction may not provide the best base for comparison, given the

heightened volatility around the time of supply.

- Outright 40-Year yields sit ~3.0bp or so off YtD cheaps, last at 0.497%, with

participants focusing on the potential for an increased JGB supply burden ahead

of the announcement re: the government's supplementary budget, which could

result in some caution at today's auction, although the fact that this auction

represents the opening of a new line may provide offsetting demand.

- Yesterday's outright concession will likely help supply digestion today, but

it is worth flagging that the 10-/40-Year and 30-/40-Year yield spreads operate

around the midpoint of their respective 1 Year ranges.

- 40-Year ASW spreads are back from their recent highs.

- Results due at 0435BST/1235JST.