TOKYO, April 25 Benchmark Japanese government
bonds edged slightly higher on Tuesday, as investors took
advantage of the previous day's dip as a buying opportunity.
An auction by the Japan's Ministry of Finance of off-the-run
JGBs, intended to enhance market liquidity, drew solid demand,
also underpinning JGBs.
The benchmark 10-year JGB yield edged down half a basis
point to 0.015 percent, while 10-year JGB futures
ended up 0.07 point at 151.05.
"I think a lot of banks are still under-invested" in JGBs,
said Tadashi Matsukawa, head of fixed income investment in Tokyo
at PineBridge Investments. "They sold a lot of JGBs and foreign
bonds back in February and March, and now they want to buy on
Tokyo markets will be closed for three days from May 3 for a
string of holidays known as the Golden Week. Investors tend to
buy bonds ahead of the Golden Week, Matsukawa said.
Last week, JGB yields plumbed their lowest levels since last
year, as investors braced for the first round of the French
presidential election on Sunday.
JGB yields jumped in line with global yields on Monday as
the market's favoured candidate won the vote and investors
trimmed their safety bids, and also as the Bank of Japan reduced
its purchases of three- to five-year bonds in its buying
On the short end on Tuesday, the two-year JGB yield
and the five-year yield were flat at
minus 0.215 percent and minus 0.160 percent respectively.
The market shrugged off comments from BOJ Deputy Governor
Kikuo Iwata, who told parliament that the central bank was
conducting a simulation study of how it could end its massive
monetary stimulus in the future although it is still far from
achieving its inflation target.
Iwata said the BOJ did not want to publicise the
exit-strategy simulation because doing so would cause market
confusion, given that the BOJ's 2 percent inflation goal remains
The BOJ will begin a two-day policy meeting on Wednesday, at
which investors expect it to hold policy steady. It is also set
to offer a more upbeat assessment of the economy than it did
last month, as a pick-up in overseas demand bolsters exports and
factory output, sources have told Reuters.
(Reporting by Tokyo markets team; Editing by Amrutha Gayathri)