The JGB curve underwent some modest............>

JGBS: The JGB curve underwent some modest bull-flattening on Wednesday, as the

super-long end of the curve continued to operate in a resolute manner, while the

short & medium-term sectors were relatively soft on lacklustre results at the

BoJ's Rinban operation for < 1-Year issues & on the back of some concession

heading into today's 2-Year JGB auction.

- The fall in the Nikkei also supported longer dated paper.

- On Wednesday the US Tsy curve twist-flattened, with the focal point being soft

7-Year supply. 

- Barclays suggest that "today could see sellers initially take a slight upper

hand overall in the JGB market on JPY weakness and adjustment pressures into the

2-Year auction (JN387) after Tsys edged lower overnight. We expect somewhat weak

results at the 2-Year auction assuming yields near current levels (WI close on

28 March: -0.145%). We find it difficult to expect much demand from Japanese

investors due to rich valuations or from foreigners in the form of USD ASW

demand due to the tightening of USDJPY xccy basis."