Some slight softness in JGB's leading up to....>

JGBS: Some slight softness in JGB's leading up to the BoJ purchase operation.

All sizes kept unchanged, some very vague/mild speculation that the BoJ could

cut short end purchases with yields still subdued and the BoJ seen as having a

preference for reducing purchase sizes when opportunity presents itself while

volatility is low.

- However USD/JPY is still below 110 as US$ maintains its weak trend, sources

say that at these levels yen is still too high for the preference of policy

makers which made a reduction in the purchase ops (which would likely result in

some yen strength) more unlikely.

- JGB futures bounce of 150.69 for the third consecutive day, last at 150.70.

- Belly of the curve seeing some selling ahead of the enhanced liquidity auction

in the 5-15.5 Year sector tomorrow.