June 20, 2013 / 2:22 AM / 5 years ago

JGBs slip, tracking U.S. Treasuries after Fed signals less bond buying

TOKYO, June 20 (Reuters) - Japanese government bond prices eased slightly on Thursday, tracking weakness in U.S. Treasuries after Federal Reserve Chairman Ben Bernanke said that the U.S. central bank could start scaling back its bond-buying stimulus in coming months as the economy improved.

* Bernanke’s confirmation that the Fed is getting closer to rolling back on its monthly $85 billion asset purchases sent benchmark 10-year U.S. Treasury yield to a 15-month high and weighed on equities.

* The 10-year JGB yield was flat at 0.810 percent after trading as high as 0.850 percent, still within the range of 0.800 to 0.900 percent the benchmark bond has been trading over the past three weeks. However, it was a far cry from a record low of 0.315 percent reached the day after the Bank of Japan announced sweeping stimulus measures on April 4 to pull the country out of deflation.

* “Treasury yield rises have put upward pressure on JGB yields but at the same time the BOJ has changed its operations in the last two months and as a result volatility has come down gradually,” said Tomohisa Fujiki, interest rate strategist at BNP Paribas in Tokyo.

“So it’s not like a huge selloff in the last two months,” he said. “We have a big bond redemption today. That also should support the market.”

* Yields began to rise after hitting the record low as banks and other investors sold JGBs, worried they were holding assets that would lose value as the promised inflation emerged.

* The 20-year yield gained 1.5 basis points to 1.705 percent after hitting a three-week high of 1.720 percent, while the 30-year yield was also unchanged at 1.830 percent after earlier inching up to 1.835 percent.

* Ten-year JGB futures eased 0.10 point to 142.89, holding above their five-day moving average of 142.87 after trading as low as 142.37.

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