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JGBs slip in line with Treasuries, though supported by 10-year sale
March 2, 2017 / 5:07 AM / 9 months ago

JGBs slip in line with Treasuries, though supported by 10-year sale

TOKYO, March 2 (Reuters) - Japanese government bonds mostly slipped on Thursday as they took their cue from weaker U.S. Treasuries and firmer Japanese equities, but were underpinned by decent demand at an auction of 10-year JGBs.

The benchmark 10-year JGB yield rose 0.5 basis point to 0.065 percent, while 10-year JGB futures were up 0.03 point in afternoon trade at 150.50, up from their morning close of 150.38.

U.S. Treasury yields rose broadly on Wednesday, with the 2-year yield hitting a more than seven-year high, on increased expectations that the Federal Reserve will raise U.S. overnight interest rates at its March meeting.

Those expectations also lifted the U.S. dollar against the yen, which helped the Nikkei stock index rise to 14-month highs and undermined the appeal of fixed income assets.

At the Ministry of Finance’s sale of 2.4 trillion yen ($21.1 billion) of 10-year JGBs with a 0.1 percent coupon, some 49.6521 percent of the bids were accepted at the lowest price of 100.13.

The sale drew bids of 3.74 times the amount offered, up from the previous sale’s bid-to-cover ratio of 3.62 times, suggesting stronger demand for the bonds. The tail between the average and lowest accepted prices came in at 0.04, nearly matching that of last month’s offering at 0.05.

The superlong zone underperformed on concerns that the Bank of Japan could trim its purchases in that zone in its JGB buying operations.

The 20-year yield rose 3 bps to 0.680 percent, while the 30-year JGB yield added 4 bps to 0.875 percent.

On Tuesday, the BOJ announced the dates of its bond-buying operation for this month, in a plan suggesting it is likely to maintain the pace of purchases in most maturities while slightly reducing its short-term bond purchases.

$1 = 113.9500 yen Reporting by Tokyo markets team; Editing by Jacqueline Wong

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