The Japanese Ministry of Finance.......>

JGBS AUCTION: The Japanese Ministry of Finance (MOF) will today sell Y400bn of

40-Year JGB's, representing the re-opening of JB11. The MOF last sold 40-Year

debt on May 29, the auction drew cover of 3.923x at a high yield of 0.865%, low

price of 97.81, with 52.4978% allotted at the high yield.

- In outright terms, the benchmark 40-Year yield had operated within an ~11bp

range in the time since the most recent auction, bottoming at 0.791% before

Friday's well documented source report triggered a sell-off in JGBS, which saw

yields surge Monday, with the 40-Year JGB yield peaking at 0.968%, the highest

level since early February, with curve steepening observed. This was before the

BOJ offered to buy an unlimited amount of 10-Year JGBs at a fixed rate of 0.11%

(the first such operation since February), which put a base into the space. -

Chatter regarding adjustments to the BOJ's MonPol settings at next week's

decision may limit demand at today's auction. It is also worth remembering that

the BOJ recently cut the size of its Rinban operations covering the sector by

Y10bn to Y60bn, with most expecting a mere 2 Rinban operations covering the

sector ahead of the 30-Year auction on August 02. Results due at 0435BST/1235JST