The Japanese MOF will today sell.......>

JGBS AUCTION: The Japanese MOF will today sell Y700bn of 30-Year JGB's,

representing the opening of JB59. The MOF last sold 30-Year debt on June 19, the

auction drew cover of 4.220 at an average yield of 0.707%, average price of

102.27, a high yield of 0.710%, low price of 102.20, with 39.1509% allotted at

the high yield. It is worth noting that the recent demand for longer dated JGBs

has pushed benchmark yields below 0.7% in the sector. Despite this, there are

several factors which could prove to be supportive of today's auction:

1) Duration reach. 2) The line will be available for purchase in the BOJ's

Rinban operations as of tomorrow. 3) Worry regarding protectionism. 3) Many exp.

the BOJ to lower its CPI exp. in July. 4) The latest batch of weekly int'l

security flow data showed that foreign purchases of Japanese bonds hit the

highest level since early March, after heavy selling in the prev. week. Domestic

lifer demand is already exp. in the longer end, owing to a perception that the

political uncertainty in Europe will act as a deterrent for lifers in EZ bonds.

5) The 30-Year sector looks relatively attractive vs. the 20-Year sector in ASW

terms. Results due at 0435BST/1235JST