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

JGBS AUCTION: The Japanese MOF will today sell Y400bn of 40-Year JGB's in a

Dutch auction. The MOF last sold 40-Year debt on July 24, the auction drew cover

of 3.302x at a high yield of 0.880%, low price of 97.33, with 36.6400% allotted

at the high yield.

- The 40-Year yield has traded in a ~21bp range since the most recent auction,

with uncertainty around the BOJ's July MonPol decision and the recent trimming

of 25+ Year purchases in the BOJ Rinban operations aiding volatility. 40-Year

yields sit just off of the recent high at 1.068% last.

- The latest adjustment to the BOJ's Rinban operations caught participants by

surprise & may make dealers a little more hesitant re: today's auction,

especially when coupled with the recent yield swings. However, with benchmark

40-Year yields > 1.00% (for the first time since Jan) outright yield levels

should pull pension funds & lifers off of the sidelines, further aided by the

limited size & 2-month auction cycle. Short covering demand & relative value

appeal on the curve should also generate demand.

- Results due at 0435BST/1235JST.