TOKYO Oct 14 Short-dated Japanese government
bonds rose in price on Friday after an auction of five-year JGBs
drew strong demand, although longer maturities dipped after
their yields hit one-week lows the previous day.
The five-year JGB yield fell 0.5 basis point to minus 0.205
percent, after the auction 2.4 trillion yen
five-year JGBs by the Ministry of Finance drew strong demand
from brokerage traders who have short positions.
The tender drew bids of 4.31 times the amount on offer,
producing the highest bid-to-cover ratio since June. The tail,
or the gap between the lowest and average price, was zero.
Many brokerage traders are thought to have had a big short
positions in the five-year paper, market players said.
"In the past, people held long positions and unwound them by
selling to the BOJ, because they expected yields to fall. But
these days, because bond yields are supposed to stay flat, they
sell to the BOJ by going short, hoping to cover the position at
auctions," said a fund manager at a Japanese asset management
The two-year notes yield also fell 0.5 basis point to minus
Yields on longer dated maturities rose, with the benchmark
10-year yield rising 0.5 basis point to minus 0.060 percent
. The 30-year yield went up 1.5 basis point to
The price of 10-year JGB futures dipped 0.03 point to 151.84
, capped at 151.92 for four straight sessions.
(Reporting by Hideyuki Sano; Editing by Eric Meijer)