* But gains were limited as market participants were reluctant to chase prices higher ahead of a five-year JGB auction on Tuesday and a 20-year sale on Thursday.* “The focus remains on Europe and how the market moves all depends on the EU summit. With quickly changing market sentiment, volatility is rising. In such an environment, I don’t think investors want to take risks in any asset class,” said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.* The 10-year JGB yield was flat at 1.020, off a two-week high of 1.025 percent hit on Monday.* Superlongs such as 20- and 30-year bonds underperformed, weighed as losses in share prices were smaller than initial expectations and by hedge selling before the auctions, a market participant at a Japanese brokerage said.The 20-year yield inched up 0.5 basis point to 1.750 percent, marking a fresh one-month high.* December 10-year JGB futures were up 0.03 point at 142.20 after rising as high as 142.30, recovering to the level of their five-day moving average at 142.26 for the first time in about a week.* The Ministry of Finance reopened the 0.4 percent coupon No. 99 five-year JGBs for the first time for Tuesday’s auction of the maturity, with an offer amount of 2.4 trillion yen ($31 billion). It will announce the auction results at 12:45 p.m. (0345 GMT).* The auction will likely be supported as the sector looks attractive on the yield curve and the Bank of Japan is expected to keep its easy monetary policy, although some investors may hold off from buying due to worries about supply increases to help fund reconstruction from the March earthquake, analysts said.

* But gains were limited as market participants were reluctant to chase prices higher ahead of a five-year JGB auction on Tuesday and a 20-year sale on Thursday.* “The focus remains on Europe and how the market moves all depends on the EU summit. With quickly changing market sentiment, volatility is rising. In such an environment, I don’t think investors want to take risks in any asset class,” said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.* The 10-year JGB yield was flat at 1.020, off a two-week high of 1.025 percent hit on Monday.* Superlongs such as 20- and 30-year bonds underperformed, weighed as losses in share prices were smaller than initial expectations and by hedge selling before the auctions, a market participant at a Japanese brokerage said.The 20-year yield inched up 0.5 basis point to 1.750 percent, marking a fresh one-month high.* December 10-year JGB futures were up 0.03 point at 142.20 after rising as high as 142.30, recovering to the level of their five-day moving average at 142.26 for the first time in about a week.* The Ministry of Finance reopened the 0.4 percent coupon No. 99 five-year JGBs for the first time for Tuesday’s auction of the maturity, with an offer amount of 2.4 trillion yen ($31 billion). It will announce the auction results at 12:45 p.m. (0345 GMT).* The auction will likely be supported as the sector looks attractive on the yield curve and the Bank of Japan is expected to keep its easy monetary policy, although some investors may hold off from buying due to worries about supply increases to help fund reconstruction from the March earthquake, analysts said.

* But gains were limited as market participants were reluctant to chase prices higher ahead of a five-year JGB auction on Tuesday and a 20-year sale on Thursday.* “The focus remains on Europe and how the market moves all depends on the EU summit. With quickly changing market sentiment, volatility is rising. In such an environment, I don’t think investors want to take risks in any asset class,” said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.* The 10-year JGB yield was flat at 1.020, off a two-week high of 1.025 percent hit on Monday.* Superlongs such as 20- and 30-year bonds underperformed, weighed as losses in share prices were smaller than initial expectations and by hedge selling before the auctions, a market participant at a Japanese brokerage said.The 20-year yield inched up 0.5 basis point to 1.750 percent, marking a fresh one-month high.* December 10-year JGB futures were up 0.03 point at 142.20 after rising as high as 142.30, recovering to the level of their five-day moving average at 142.26 for the first time in about a week.* The Ministry of Finance reopened the 0.4 percent coupon No. 99 five-year JGBs for the first time for Tuesday’s auction of the maturity, with an offer amount of 2.4 trillion yen ($31 billion). It will announce the auction results at 12:45 p.m. (0345 GMT).* The auction will likely be supported as the sector looks attractive on the yield curve and the Bank of Japan is expected to keep its easy monetary policy, although some investors may hold off from buying due to worries about supply increases to help fund reconstruction from the March earthquake, analysts said.

REUTERS FORECASTS Sept Aug ForecastrangeHeadline CPI m/m +0.2 pct +0.3 pctHeadline CPI yr/yr +3.1 pct +3.1 pct +2.8 pctto +3.2 pctCore CPI m/m +0.2 pct +0.4 pctCore CPI yr/yr +2.0 pct +1.9 pct +1.5 pctto +2.1 pctFACTORS TO WATCH:If the forecasts are correct, headline inflation will remain above the Bank of Canada’s target range of 1 percent to 3 percent. Core inflation, which excludes volatile items like gasoline and some food, is in the center of the target.In normal times, this would the central bank under considerable pressure to raise rates to keep inflation from spinning out of control in coming quarters.But BoC Governor Mark Carney, and markets for that matter, are more focused on growth than on inflation, given unease over Europe’s sovereign debt crisis and signs of weak demand for Canadian goods from the key U.S. market.The bank has signaled it is in no rush to hike rates from their ultra-low rate of 1 percent, even if inflation looks high.MARKET IMPACT:With investors focused on Europe and fears of contagion into the global banking system, it may take a sharp jump in inflation to alter expectations that the Bank of Canada will hold its key interest rate unchanged at 1 percent until the second half of 2012.An unexpected jump in the rate could support the Canadian dollar and hurt bonds.Lower-than-expected inflation could prompt some to see a rate cut as a more serious option for the central bank’s next move, dampening the value of the currency.The overnight index swap market is now pricing in the possibility of a rate decrease, although economists still expect the next move to be an increase.

Gross increased mortgage debt to 38 percent of assets in his $242 billion PIMCO Total Return Fund in September, from 32 percent in August, as the U.S. central bank announced last month that it “will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.”PIMCO’s latest bet on mortgages isn’t going unnoticed.Gross, who helps oversee $1.2 trillion as co-chief investment officer at PIMCO, made headlines earlier this year and came under heavy criticism when the manager widely known as the “bond king” bet heavily against U.S. Treasuries — one of the biggest outperformers of this year.His move into mortgage-backed securities also comes as the PIMCO Total Return fund’s cash equivalents and money-market securities fell to negative 19 percent September, from negative 9 percent in August.In having a so-called negative position in cash equivalents and money-market securities, it is an indication of derivative use and short-term securities being put up as collateral as a way to boost leverage and increase the fund’s holdings in bonds with longer maturities such as mortgage-backed securities, Treasuries and corporate bonds, according to Eric Jacobson, director of fixed-income research at Morningstar who has covered PIMCO for more than a decade.Over the years, some analysts in the fixed-income world have pointed out that Gross’ use of derivatives to boost leverage and exposure to higher-yielding assets is what distinguishes the Total Return Fund from an ordinary plain vanilla bond fund.”One very basic thing to know, too, is that PIMCO classifies anything with a duration of one year or shorter as cash — regardless of sector,” Jacobson added.Jacobson said after careful examination of the PIMCO fund’s effective duration of 7.14 years — about double over the last six months — “it doesn’t necessarily mean PIMCO raised their pure interest-rate risk to the United States. They didn’t double down on Treasuries.”Rather, PIMCO took on “loose” interest rate risk to other credit and government markets, he said, noting that the Total Return fund increased exposure in non-U.S. developed and emerging markets securities in September.Duration is a bond’s sensitivity to interest rate fluctuations, and going longer duration is an investment strategy when rates are expected to remain low or drop further and vice versa.All told, the PIMCO Total Return fund’s bad call on Treasuries earlier this year has cost it.It is up only 1.06 percent year to date versus the benchmark BarCap U.S. Aggregate Index which is up 3.99 percent. But on a three-year basis, the fund is up 10.14 percent against the benchmark’s 9.36 percent returns. The fund has also held up well over the last five years, with the fund up 7.80 percent versus the BarCap’s 5.48 percent returns.

Rockcityclub.com launches October 14, dubbing itself a “social music network” with aggressive plans to consolidate services such as artist development, promotion and distribution into a one-stop shop integrated with Facebook, Twitter and other social media.Jack Wishna, who has previously brokered Las Vegas concert deals for the likes of Michael Jackson and Britney Spears and is chief executive of Rock City Club parent company Rockrena, told Reuters the site is designed to create tomorrow’s music stars rather than simply identify them.”Everyone looks at discovering talent these days from what they see,” said Wishna. “They see ‘American Idol.’ They see ‘The X-Factor.’ They see ‘The Voice’ and MySpace and YouTube. It’s a crowded field, and all they do is look for the needle in the haystack. What we do, in essence, is take care of the haystack.”Rock City Club’s ambitious platform takes a broad approach to developing artists online. Performers register via Facebook or Twitter and gain access to applications that help organize and distribute music, raise their profile among potential fans and allow them to interact with listeners.As artists gain a following, Rock City plans to offer the most popular performers a chance to stream live shows and compete for a performance contract at the Palms Resort and Casino in Las Vegas. Selected artists also get coached by the “Producer’s Circle,” a group of on-staff advisors whose credits include songs for Madonna and Aerosmith.OLD SCHOOL, ONLINEWishna initially formed the idea with the late Don Kirshner, the famed music promoter and producer who helped launch the careers of Carole King and Neil Diamond. Rock City Club wants to merge new Web technology with Kirshner’s old-school approach to developing potential stars by working with talent that might not fit the reality TV mold.”American Idol rates popularity,” he said. “We are going to focus on core values like stage presence, talent and marketability that have made big names in the past,” he said.Fans can make money, too. If invited, a widget is placed on their Facebook page allowing friends to hear music from bands they support. When people purchase individual tracks online, the fan will receive 25 percent of the profits from each sale.Rock City Club, which charges a $12.95 monthly user fee, already has significant competition. ReverbNation, established in 2006, includes many of the same social media components at no charge, although it also has a “premium” package with more features at an additional cost.Additionally, MySpace recently recruited Justin Timberlake to help their rebranding as a music-based social network, and simply posting homemade videos on YouTube remains the easiest and cheapest way to gain exposure. Just ask Justin Beiber.Yet Wishna remains confident Rock City Club will offer more value and real results than its rivals.”There are a lot of firms who do a little of what we do, but there’s not one firm that does everything we do. We took a broken model, found ways to fix it and enhance the experience for the artists and the fans,” said Wishna.