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

JGBS AUCTION: The Japanese MOF will today sell Y2.1tn of 2-Year JGB's. The MOF

last sold 2-Year debt on Jun 28, the auction drew cover of 4.884x at an average

yield of -0.128%, average price of 100.458, high yield of -0.127%, low price of

100.455, with 81.3815% allotted at the high yield. The 2-Year yield has operated

within a sub-6bp range in the time since the most recent auction, with Friday's

well documented RTRS source report triggering a sell-off in JGBS, as the 2-Year

JGB yield peaked at -0.121%, 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 Feb), which put a base into the space, with

various source reports since suggesting that the BOJ may not act next week

adding further support.

- Chatter re: adjustments to the BOJ's MonPol settings may still limit demand,

as it did at the 40-Year auction earlier this week. 2s offer decent enough carry

vs. 3s, but the roll down trims away most of that advantage. 2s look slightly

attractive vs. 5s on an ASW & Z-spread basis, although there isn't much in it. 

- Results due at 0435BST/1235JST