TOKYO Oct 12 Japanese government bonds mostly
firmed on Wednesday, shrugging off an overnight rise in U.S.
Treasury yields and bolstered by decent demand at a 30-year
The benchmark 10-year JGB yield edged down half a basis
point (bp) to minus 0.060 percent, while December
10-year futures ended up 0.05 point at 151.86.
The yield curve flattened as prices in the superlong zone
gained after the auction, with the 20-year JGB yield falling 1
bp to 0.385 percent, while the 30-year yield shed
2.5 bps to 0.500 percent.
In the previous session, U.S. Treasury yields rose to a
four-month high in technical trading that squared the market
with a fall in futures prices the day before when the cash
market for bonds was closed for the Columbus Day holiday.
Bank of Japan board member Yutaka Harada said on Wednesday
that the recent recovery of the 20-year JGB yield was healthy in
the light of its past fall.
"Japan is quite distant from reaching the limits of monetary
easing," said Harada, who was one of the policy board members
who voted in favour of the BOJ's monetary shift last month to
target yield curve control instead of the money supply.
But Harada said he saw no need to ease policy at the
central bank's next rate review, and BOJ Governor Haruhiko
Kuroda did not directly refer to a need to achieve the bank's
inflation target quickly when he reiterated to parliament on
Wednesday that he remains ready to expand stimulus.
That suggests that policymakers have raised the threshold
for further easing after last month's comprehensive policy
"It seems the market is settling down, after the BOJ's
announcement of yield targetting last month," said Naomi
Muguruma, senior strategist, Mitsubishi UFJ Morgan Stanley
"The market today is simply buying on dips after the JGB
auction result," she said. "Market investors are concerned about
losing a chance to buy on dips for the second half of the fiscal
year, with nowhere else to go for investment money as the curve
is still underwater up to 10 years."
The Ministry of Finance's sale of 800 billion yen ($7.77
billion) of reopened 30-year JGBs with a 0.5 percent coupon
produced a highest yield of 0.519 percent, with 28.4431 percent
of the bids accepted at the lowest price of 99.50.
The sale drew bids of 3.64 times the amount offered, up from
the previous sale's bid-to-cover ratio of 3.13 times.
The tail between the average and lowest accepted prices
modestly narrowed to 0.13, compared with that of last month's
offering at 0.18, indicating slightly stronger demand for the
($1 = 102.9000 yen)
(Reporting by Tokyo markets team; Editing by Eric Meijer)