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 May 12, the auction drew

cover of 4.089x at an average yield of -0.001%, average price of 101.00, high

yield of 0.000%, low price of 100.99, with 72.6710% of bids allotted at the high

yield.

- 10-Year yields have oscillated around the 0% mid-point of the BoJ's permitted

trading range in recent times, with a focus on the incoming uptick in JGB

issuance, as the government looks to fund its increased fiscal spend.

- Modest tightness in repo (in relative terms) has some desks pointed to a need

for at least some light short covering at auction, with further support seen as

some look for the BoJ to lift the purchase size of 5-10 Year JGBs, given the

recent tweak to the lower bound of the Bank's purchase limits in its June Rinban

plan.

- 10-Year ASWs have stabilised around the mid-point of their medium term range

in recent times.

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