The MOF will today sell Y400bn of......>

JGBS AUCTION: The MOF will today sell Y400bn of 10-Year JGBi's. The MOF last

sold 10-Year JGBi's on May 10, the auction drew cover of 4.018x at a high yield

of -0.513%, low price of 106.35, with 32.0441% allotted at the high yield.

- 10-Year Break-evens are 13.5bp off the post-BOJ highs, coming under further

pressure this morning heading into auction, likely crimped by the rumours of &

the reality of lower BOJ inflation exp., as well as the implementation of the

Bank's wider 10-Year yield band. That said the most recent Tokyo CPI print

suggests that the next nationwide CPI print may tick upwards, albeit at a still

subdued level. The fact that the BOJ formally noted that it will take longer

than previously thought to reach its CPI goal also weighed on the space, adding

to the pressure on break evens.

- Many exp dealers to assume a cautious stance at today's auction. However, the

fact the next 10-Year JGBi auction falls in November, less than a year out from

the proposed sales tax increase (scheduled for October 2019), may provide some

support to the space in the coming months.

- Results due at 0435BST/1235JST.