PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y2.6tn of 10-Year JGB's

opening JB#359. The MOF last sold 10-Year debt on June 2, the auction drew cover

of 3.365x at an average yield of 0.000%, average price of 100.98, high yield of

0.001%, low price of 100.96, with 86.4694% of bids allotted at the high yield.

- The major obstacle this auction will have to overcome is its upsizing

(+Y500bn), a result of the fiscal burden for Japan post-COVID-19. Still, the

attractive carry & roll 10s offer (the highest for benchmarks across the curve)

bodes well, as does the recent (ltd) cheapening of 10s outright, although the

steepening of the curve has pressed the 5-/10-/20-Year butterfly to YtD lows in

recent sessions. Still, those looking for further steepening of the curve on the

JGB supply dynamic may also look to buy 10s vs. longer dated paper as part of a

relative value play. BoJ Rinban dynamics may also provide some support, with the

Bank seemingly set to upsize its 5-10 Year JGB purchases. ASWs remain elevated

in terms of broader recent history, although some way shy of the March highs.

- The allure of new paper via primary supply may support takedown.

- Results due at 0435BST/1235JST.