(Updates with futures closing price, analyst quote)
TOKYO, April 13 The benchmark 10-year Japanese
government bond yield edged higher on Thursday after plumbing
its lowest level since November and coming within a whisker of
For the most part of the session, JGBs took cues from lower
U.S. Treasury yields and were underpinned by solid demand at a
30-year JGB auction.
The benchmark 10-year JGB yield fell one basis point to
0.005 percent, but was one basis point higher at
0.025 percent in late afternoon trade.
The Bank of Japan, in its yield curve control policy,
pledged to guide the 10-year JGB to around zero percent.
"Some people bought on momentum, when the curve flattened"
after the 30-year sale, said Naomi Muguruma, senior strategist
at Mitsubishi UFJ Morgan Stanley Securities.
"We all know that the BOJ's target is around zero, so the
consensus view is that they would probably taper once the
10-year yield hit that level. So there was some profit-taking,"
The outlook for JGBs also depends on the situation in North
Korea, she said, with safe-haven buying expected to underpin
demand on any escalations.
North Korea may have the capacity to deliver missiles
equipped with sarin nerve gas, Japanese Prime Minister Shinzo
Abe said on Thursday, amid concerns that the reclusive state
could soon conduct its sixth nuclear test or more missile
While 10-year JGB futures rose to a session high of
151.15 in afternoon trade, their highest since November, before
paring gains as cash bonds sold off and finished only 0.01 point
higher at 150.91.
The U.S. benchmark Treasury yield approached five-month lows
on Wednesday, prompted by U.S. President Donald Trump's comments
on favouring low interest rates. It continued to slip in Asian
trading, and last stood at 2.242 percent, down from
the U.S. close of 2.296 percent. It touched 2.221 percent
earlier, the lowest since November.
On Thursday, Japan's Ministry of Finance offered 800 billion
yen ($7.35 billion) of 30-year JGBs with a 0.8 percent coupon,
and 98.5832 percent of the bids accepted at the lowest price of
The sale drew bids 3.08 times the amount offered, down from
the previous sale's bid-to-cover ratio of 3.14 times.
However, the tail - the gap between the average and lowest
accepted prices - narrowed to 0.07, compared with that of last
month's offering at 0.19, indicating stronger demand for the
The outcome bolstered the super-long tenor, with 30-year
yield slipping 4 basis points to 0.770 percent,
its lowest since late January. In late trading, it stood at
0.790 percent, down 2 basis points.
The 20-year yield fell half a basis points to 0.580 percent
after falling to 0.550 percent earlier, its
lowest since December.
The five-year yield dropped one basis point to minus 0.175
percent, its lowest since November, but was last
flat at minus 0.165 percent.
($1 = 108.8000 yen)
(Reporting by Tokyo markets team; Editing by Sam Holmes and