April 6, 2017 / 6:55 AM / 3 months ago

JGBs steady, long maturities firm after liquidity-boosting sale

2 Min Read

TOKYO, April 6 (Reuters) - Japanese government bonds were steady on Thursday, underpinned by firm U.S. Treasuries as market participants awaited the Bank of Japan purchase operations, while superlong yields edged down after a liquidity-enhancing auction.

The benchmark 10-year JGB yield was flat at 0.060 percent , while 10-year JGB futures ended up 0.1 points at 150.42.

U.S. Treasury yields fell overnight, with three- and five-year yields touching more than five-week lows after traders viewed the latest U.S. Federal Reserve meeting minutes as indicating the central bank was maintaining a relatively dovish outlook for a gradual pace of interest rate hikes.

The Ministry of Finance offered 500 billion yen ($4.53 billion) of off-the-run 20- and 30-year JGB issues with 15 years or more left to maturity, in a regular sale aimed at enhancing liquidity conditions.

The 20-year JGB yield fell 1.5 basis points (bp) to 0.630 percent, while the 30-year JGB yield shed 2.5 basis points to 0.840 percent.

The 40-year yield shed 3 bps to 1.050 percent , moving away from its previous session high of 1.090 percent, which was its highest level since February 2016.

Investors were waiting to see if the BOJ trims its purchases of longer JGBs in operations on Friday, the possibility of which bolstered market sentiment.

In its bond-buying operations on Wednesday, the central bank offered to buy only 280 billion yen of one- to three-year JGBs, which was the lowest level in almost three years, and was 20 billion yen less than its previous purchase amounts in that zone. However, it was still above the midpoint of the BOJ's 200 billion yen to 300 billion yen buying target range.

$1 = 110.5200 yen Reporting by Tokyo markets team; Editing by Sherry Jacob-Phillips

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