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

JGBS AUCTION: The Japanese Ministry of Finance (MOF) will today sell Y2.2tn of

10-Year JGB's, representing a re-opening of JB351. The MOF last sold 10-Year

debt on June 03, the auction drew cover of 4.366x at an average yield of 0.037%,

average price of 100.62, high yield of 0.039%, low price of 100.60, with

38.2288% allotted at the high yield.

- JGBs have experienced heightened vol. in recent sessions, first on speculation

of MonPol adjustment heading into the BOJ decision & then on the back of the BOJ

adopting a more flexible approach to its 10-Year yield target, with Kuroda

pointing to a band of -/+0.2% for 10-Year yields. The ensuing vol. makes it hard

to assess the prospects of the upcoming auction, with 10-Year yields closing at

0.131% on Wednesday, still well shy of the upper band of the newly permitted

range, dealers will likely adopt a cautious approach. Benchmark 10-Year JGB

yields have operated in an 8bp range over the last two sessions, reaching levels

not seen since February 2017. Benchmark 10s look a little rich against 7s (in z

spread terms), which may lead to additional caution around the auction, although

10s offer a much more favourable carry & roll. Results due at 0435BST/1235JST