February 27, 2018 / 5:06 AM / a year ago

JGBs edge up, curve steepens as 2-year auction draws strong demand

TOKYO, Feb 27 (Reuters) - Japanese government bond prices tracked gains in U.S. Treasuries and edged up on Tuesday, with the yield curve steepening slightly after an auction of two-year debt attracted strong investor demand.

The two-year yield fell 1 basis point to minus 0.165 percent, while the 40-year yield slipped 0.5 basis point to 0.880 percent.

Tuesday’s 2.2 trillion yen ($20.57 billion) two-year JGB auction found plenty of bids amid the recent volatility in the equity markets.

The bid-to-cover ratio, a gauge of demand at auctions, at the sale rose to 5.84 from 5.02 at the previous auction last month and was the highest since June 2017.

U.S. Treasury prices rose overnight as traders reduced their bearish bond positions before new Federal Reserve Chairman Jerome Powell’s semi-annual monetary policy testimony before Congress later on Tuesday. ($1 = 106.9600 yen) (Reporting by the Tokyo markets team; Editing by Subhranshu Sahu)

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