PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y1.2tn of 20-Year JGB's

opening #JB173. The MOF last sold 20-Year debt on June 25, the auction drew

cover of 3.870x at an average yield of 0.386%, average price of 100.24, high

yield of 0.389%, low price of 100.20, with 59.9036% of bids allotted at the high

yield.

- The increased fiscal burden pushed 20s to the outright cheapest levels seen

since early '19 in recent weeks, with yields sitting a few bp off cycle cheaps

ahead of supply (which is upsized). Elevated ASW's & outright levels may entice

demand (alongside the prospect of fresh paper via primary issuance). Thus far,

the increase in auction issuance size has seen solid demand, allowing auctions

across the curve to pass smoothly. The 10-/20-/30-Year fly sits within the range

witnessed since Mar. Desks point to some short covering needs at auction. 

- Recent BoJ rhetoric has pointed towards the Bank only lifting its long end

purchases if yields were to rise in an unorderly manner. Recent JSDA data points

to demand from domestic investors in the longer end, which should limit the

chances of such a move, for now. Results due at 0435BST/1235JST.