March 13, 2017 / 7:08 AM / 6 months ago

Benchmark JGBs edge down slightly as Fed, BOJ awaited

TOKYO, March 13 (Reuters) - Benchmark Japanese government bonds edged down slightly on Monday as investors cautiously awaited this week’s U.S. and Japanese central bank meetings.

The benchmark 10-year JGB yield added 0.5 basis point (bp) to 0.090 percent, while 10-year JGB futures ended down 0.05 point at 149.90.

The yield on 20-year JGBs edged down 0.5 bp to 0.670 percent ahead of the next session’s 20-year auction.

But the 30-year JGB yield rose 1 bp to 0.875 percent.

In its two-day meeting ending on Wednesday, the U.S. Federal reserve is widely expected to raise interest rates.

The Bank of Japan, in its asset buying operations on Monday, offered to buy 450 billion yen ($3.93 billion) of JGBs maturing in five to 10 years, and 70 billion yen of JGBs maturing in up to one year.

On Friday, the BOJ trimmed its purchases of one- to three-year JGBs to 300 billion yen from 320 billion yen at its buying operations in the previous week. It was the smallest amount of buying in that zone since September 2014.

The BOJ will hold a monetary policy meeting this week and is expected to hold policy steady on Thursday, and stress that inflation is nowhere near levels that justify talk of withdrawing its massive stimulus.

At his post-meeting news conference, BOJ Governor Haruhiko Kuroda is likely to stress that the central bank has no plan to raise its yield targets any time soon with inflation distant from its 2 percent target.

Data released earlier on Monday showed Japan’s core machinery orders unexpectedly dropped in January from the previous month, falling the most in five months and adding to worries about whether recent signs of economic recovery will be sustainable.

Still, core consumer prices rose for the first time in over a year in January and many analysts expect inflation to accelerate toward 1 percent later this year. Roughly half of analysts polled by Reuters last month predicted the BOJ’s next move will eventually be to pull back from its ultra-easy policy.

BOJ data released earlier on Monday showed Japan’s wholesale prices rose 1.0 percent in the year to February. ($1 = 114.5900 yen) (Reporting by Tokyo markets team; Editing by Gopakumar Warrier)

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