August 24, 2017 / 6:25 AM / a month ago

JGBs firm, taking cue from stronger U.S. Treasuries

TOKYO, Aug 24 (Reuters) - Japanese government bonds rose on Thursday, getting a lift from firm U.S. Treasuries which helped bolster demand at a liquidity-boosting auction.

The 10-year cash JGB yield inched down half a basis point to 0.025 percent, its lowest since May 8.

The September 10-year JGB futures contract finished up 0.14 point at 150.91, after touching its highest levels since April.

The 20-year JGB yield shed half a basis point to 0.535 percent, its lowest since Dec. 8, 2016, while the 30-year JGB yield fell one basis point to 0.815 percent.

On Wednesday, U.S. yields dropped on safety buying after President Donald Trump said he would be willing to risk a government shutdown to secure funding for a border wall, raising fears that a battle to raise the debt ceiling could delay payments on some bonds.

The benchmark 10-year Treasury yield stood at 2.176 percent in Asian trading, not far from its U.S. close of 2.171 percent on Wednesday, and well below last week’s intraday high of 2.285 percent.

The lower yields contributed to firm demand at the Ministry of Finance’s liquidity-enhancing sale of 550 billion yen ($5.04 billion) of off-the-run JGBs.

The possibility that the Bank of Japan will tweak its JGB purchases also underpinned bond market sentiment. On Friday, the BOJ will purchase between 350 billion yen and 550 billion yen of five- to 10-year JGBs under its regular buying operations.

Last week, the BOJ took advantage of thin liquidity during the summer vacation season to slightly reduce its JGB buying with minimal market impact, trimming buying of five- to 10-year JGBs to 440 billion yen from 470 billion yen in the previous four operations.

$1 = 109.0800 yen Reporting by Tokyo markets team; Editing by Sunil Nair

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