December 19, 2016 / 7:51 AM / a year ago

JGBs stabilise, but super-long bonds slip after rally last week

TOKYO, Dec 19 (Reuters) - The price of Japanese government bonds of up to 10 years to maturity held firm on Monday as seemingly-relentless rises in U.S. bond yields appeared to have paused for now, but the longer end of the curve slipped on profit-taking after their rally.

The short end of the curve drew support also from the Bank of Japan, which offered to buy maturities between one to 10-years on Monday - a move that surprised some market players.

The 10-year JGB yield stood flat at 0.075 percent .

U.S. bond yields came off last week’s highs while the Japanese yen bounced back from 10-month lows and Japanese shares slipped as players took profits from their recent trades betting on higher U.S. growth and inflation, all supporting JGBs.

In addition, there are limited JGB offers until the end of year while there is a large JGB redemption on Tuesday, making the market’s short-term demand-supply conditions favourable, traders say.

The five-year JGB yield dipped 0.5 basis point to minus 0.070 percent while the two-year yield shed 0.5 basis point to minus 0.185 percent. The price of 10-year JGB futures rose 0.03 point to 149.57.

But superlong bonds slipped as their rally since the BOJ’s move last week to stem rises in their yields ran out of steam by Monday.

The BOJ increased the size of its buying in those maturities on Wednesday and conducted another buying in the same maturities on Friday, helping to bring down their yields last week.

The 20-year yield rose to 0.595 percent, off one-week low of 0.565 percent touched on Friday. The 30-year yield rose 3.0 basis points to 0.695 percent. (Reporting by Tokyo Markets Team; Editing by Richard Borsuk)

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