The JGB curve steepened on Thursday,...........>

JGBS: The JGB curve steepened on Thursday, although yields closed off of best

levels after the 10-Year measure breached Monday's high. Desks pointed to a

couple of protagonists behind the move. Firstly the global bond sell off

observed late Wednesday and secondly a JiJi article that didn't get much

coverage, which once again points to the BOJ raising the upper bound on 10-Year

JGB yields from 0.1% at its meeting next week, while the article expects the BOJ

to maintain the central target of around 0%.

- The latest 2-Year JGB auction generated lacklustre results with the average

price (100.437) coming in below the estimate of the low price among dealers

(100.44), with the bid to cover a shade softer when compared to the most recent

auction, although it remained well above 4.000, albeit well shy of the 6 auction

average of 5.113. There was little reaction observed in the 2-Year cash space

that could be deemed auction-based.

- Futures failed to gain momentum below Wednesday's low (150.57) thus far, with

a clean break opening up a move to hourly support from July 24 (150.45).

- Focus today falls on the BOJ's 1-10 Year Rinban operations.