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Benchmark JGBs steady, curve steepens as investors await Trump
January 11, 2017 / 7:27 AM / 8 months ago

Benchmark JGBs steady, curve steepens as investors await Trump

TOKYO, Jan 11 (Reuters) - Benchmark Japanese government bonds were steady on Wednesday, as investors shrugged off a decent 30-year sale and awaited President-elect Donald Trump’s news conference later in the day.

The 10-year JGB yield was flat at 0.055 percent , while 10-year JGB futures edged up 0.06 point to 150.26.

“Japanese markets are all more or less rangebound waiting for what Mr. Trump will say tonight,” said Naomi Muguruma, senior strategist, Mitsubishi UFJ Morgan Stanley Securities.

“Real money investors are on the sidelines,” she said, with traders hedging some positions and putting some steepening pressure on the curve in afternoon trading.

Bank of Japan Governor Haruhiko Kuroda voiced optimism over the health of the U.S. economy in a meeting with Prime Minister Shinzo Abe on Wednesday.

“It’s kind of a signal to the market that they’re keeping an eye on market reactions,” Muguruma said.

In his first such meeting since September, Kuroda said he received no particular requests from the premier on monetary policy and that there was no specific discussion about U.S. President-elect Donald Trump.

The Ministry of Finance offered 800 billion yen ($6.90 billion)of 30-year JGBs with a 0.60 percent coupon, and 36.9918 percent of the bids were accepted at the lowest price of 96.20.

The sale drew bids of 3.33 times the amount offered, up from the previous sale’s bid-to-cover ratio of 2.85 times.

The tail between the average and lowest accepted prices narrowed to 0.23, compared with that of last month’s offering at 0.40, indicating slightly stronger demand for the bonds.

After the sale, the 20-year yield rose 1 basis point (bp) to 0.610 percent, while the 30-year yield rose 2 bps to 0.765 percent.

But demand for shorter maturities continued to bolster prices at the shorter end of the curve.

The yield on two-year JGBs shed half a basis point to minus 0.250 percent, its lowest since Nov. 11, while the five-year JGB yield slipped minus 0.135 percent, its lowest since Nov. 15. ($1 = 115.9800 yen) (Reporting by Tokyo markets team; Editing by Kim Coghill)

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