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

JGBS AUCTION: The Japanese MOF will today sell Y2.0tn of 5-Year JGB's. The MOF

last sold 5-Year debt on August 16, the auction drew cover of 3.949x at an

average yield of -0.076%, average price of 100.86, high yield of -0.074%, low

price of 100.85, with 37.0117% allotted at the high yield.

- The 5-Year yield has traded in a 3.5bp range since the most recent auction,

sitting just off the recent high at -0.062%.

- While the outright yield level seemingly bodes well for the auction,

considering the last auction passed smoothly at lower yields, the zone does not

look attractive on a relative basis & there is a lack of short positioning in

the sector.

- While the nominal value of each 3-5 Year Rinban operation to be conducted thus

far this month has been higher than the levels seen in Aug., the lower number of

purchases means that the BOJ will purchase less paper in the bucket than it did

in August, this is expected to revert in October, owing to calendar effects.

- Results due at 0435BST/1235JST.