TOKYO, April 4 Japanese government bonds mostly
gained on Tuesday, bolstered by safe-haven buying as equities
dipped and on decent results at an auction of 10-year JGBs.
The benchmark 10-year JGB yield fell 1 basis point (bp) to
0.060 percent, while 10-year JGB futures ended up
0.18 point at 150.40.
"There was a moderate flight-to-quality move, and also a
supportive JGB auction today," said Naomi Muguruma, senior
strategist at Mitsubishi UFJ Morgan Stanley Securities.
The Ministry of Finance offered 2.3 trillion yen ($20.83
billion) of 10-year JGBs with a 0.1 percent coupon. Some 57.3576
percent of the bids were accepted at the lowest price of
The sale drew bids of 3.96 times the amount offered, up from
the previous sale's bid-to-cover ratio of 3.74 times, indicating
improved demand for the bonds. The tail between the average and
lowest accepted prices narrowed slightly to 0.03, compared with
that of last month's offering at 0.04.
"The auction results were fair, as most peopled had
expected. It seems that Japanese real-money investors have
plenty of cash liquidity at hand, at the beginning of the fiscal
year, and since U.S. Treasury yields have stopped rising and are
gradually descending now," Muguruma said.
Most people still expect the U.S. Federal Reserve to
tighten, she added, but "it seems the U.S. Treasury market has
already priced that in."
Benchmark U.S. 10-year yields touched more than one-month
lows on Monday.
The two-year JGB yield fell 1 bp to minus
0.180 percent on Tuesday, moving away from the previous
session's high of minus 0.170 percent, which was its highest
level since late December.
Shorter maturities had come under pressure on Monday after
the Bank of Japan announced on Friday that it would trim the
amount of one- to three-year JGBs, and three- to five-year JGBs
it buys in its operations this month, while leaving planned
purchase amounts of longer-dated JGBs unchanged.
The superlong zone gave up its slight gains late in the
session on Tuesday, with the 20-year JGB yield
flat at 0.635 percent, while the 30-year JGB yield
added 1 bp to 0.855 percent.
Against the backdrop of a solid JGB auction, the Nikkei
stock average foundered, and ended down 0.9 percent.
($1 = 110.4000 yen)
(Reporting by Tokyo markets team; Editing by Sunil Nair)