The JGB curve twist-flattened on Thursday,.....>

JGBS: The JGB curve twist-flattened on Thursday, as the super-long end

outperformed. The morning session saw modest outperformance for long dated paper

running into 30-Year supply after the bull flattening that was seen in US Tsys

on Wednesday.

- The auction provided encouraging results (despite unattractive outright

yields) signalling that passive investors are happy to hold longer dated paper

as we enter the new FY. Super-long paper extended on the morning's gains as the

belly underperformed. JGBs sharply outperformed swaps in the super-long end. A

directionless Nikkei also helped draw demand for JGBs.

- Barclays suggest that "today could see sellers take a slight upper hand, led

by the 10-20 Year sectors, on improving risk sentiment after US Tsys reversed

course in a selloff overnight, while the super-long end remains firm on

perceptions of favourable supply and demand. The BoJ is scheduled to hold buying

operations for 1-5y and 10y+ issues. Although the curve has flattened further,

we expect the size of the offer to be unchanged given that the operation comes

immediately after an auction."