VIEW: J.P.Morgan expect "upsized auctions to...>

JGBS: VIEW: J.P.Morgan expect "upsized auctions to weigh on the super-long

sector from July. While there are potential candidates for dip-buyers (lifers,

regional bans, Japan Post Bank, etc.), they are already buying somewhat more

than usual. With limited scope for QE boost, clearing level of yields may need

to adjust higher if demand proves to be insufficient to clear supply. Against

this backdrop, we enter a 10s30s JGB steepener trade at this juncture. The key

risk to this trade is risk sentiment, which may derail the steepening trend.

Another risk is unexpectedly swift support coming from the BoJ (most likely from

concerns around 10Y JGB), but we see limited chance of this. We may consider

stop loss if 30-Year JGB yields break below 0.50%, and will also review this

trade when 30-Year JGB yields reache 0.60%, a psychologically important level

for dip-buyers."