September 11, 2013 / 3:28 AM / 4 years ago

JGBs soften in line with weaker U.S. Treasuries

TOKYO, Sept 11 (IFR) - Japanese government bond prices ended the morning session slightly lower on Wednesday, sending yields up 0.5 basis point to 1.5 basis points in the 5-year and longer maturities.

A rebound in U.S. Treasury yields, the dollar/yen and stock prices overnight had some negative impact on JGBs across the curve. Mid-term JGBs were weaker from the market open, as one megabank yesterday sold mid-term JGBs aggressively before Thursday’s monthly 5-year JGB auction.

The Bank of Japan offered to buy 400 billion yen ($4 billion) of JGBs in the 5-year to 10-year zone and 200 billion yen of JGBs in the 10-year and longer zone. After the BOJ’s offer, long-term JGBs extended their earlier losses slightly, despite sporadic dip-buying by regional banks. Meanwhile, 20-year JGBs remained softer, with yields on track to break two consecutive rising sessions.

At midday, the yield on the current 5-year JGBs rose 1.5 basis points from Tuesday to 0.270 percent, ahead of Thursday’s monthly auction of 2.7 trillion yen of 5-year notes.

The 10-year yield added 1.5 basis points to 0.745 percent, up from 0.740 percent earlier in the session, while the 20-year yield rose 0.5 basis point to 1.655 percent. The yield on the new 30-year JGBs (issue #40) moved in a range of 1.805 percent to 1.810 percent before closing at midday up 0.5 basis point at 1.805 percent, compared with the 1.803 percent average accepted yield in Tuesday’s auction.

Lead December 10-year JGB futures moved in a 143.38-143.55 range before finishing the morning session down 0.04 point at 143.49.

Later on Wednesday, the Ministry of Finance will hold one of its regular periodic meetings with JGB institutional investors from 06:30 GMT.

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