UST's rotated around mixed levels on...........>

JGBS: UST's rotated around mixed levels on Tuesday, in a narrow range for much

of the session, as the long end gained late on. Flow was two-way net, with

positioning ahead of tomorrow's CPI apparent, curve flatteners seen. Options saw

a heavy unwinding of long puts.

- The JPY has rallied over the last 24-hours or so, with USDJPY sellers running

out of steam at 107.40 This triggered some light verbal intervention from

officials as the MoF's Asakawa noted that the institution was on the lookout for

speculative movements in the JPY, USDJPY last 107.80.

- Supply comes in the form of Y2.2tln worth of 5-Year Bonds.

- JGB outlook Barclays: "Today could see the JGB curve continue its

bull-flattening trend on JPY strength after USTs were bought in the long end

overnight. We expect the  5y auction (JS134) to clear smoothly assuming yields

near current levels. Those yields are roughly around the average at the last

auction, which produced solid results & investors appear comforted by the

announcement of BoJ Governor Kuroda's likely reappointment. The absence of

particularly rich valuations on the curve should also lend support."