Benchmark JGBs rise as BOJ outcome awaited; superlongs dip

TOKYO Mon Oct 29, 2012 10:20pm EDT

Related Topics

TOKYO Oct 30 (Reuters) - Benchmark Japanese government bonds rose on Tuesday after the previous session's fall as investors awaited the outcome of a Bank of Japan meeting at which the central bank is expected to take further easing steps.

* The 10-year yield fell 1 basis point to 0.760 p ercent, within half a basis point of this month's low of 0.755 percent. A break below that would bring it to its lowest level since Aug. 7.

* The 10-year JGB futures gained 0.10 point to 144.32 after briefly rising as high as 144.38, their highest level since Aug. 7.

* The BOJ is expected to ease monetary policy for the second straight month, most likely by increasing its asset buying and lending programme by at least 10 trillion yen ($126 billion).

* "If there is no action, it would take markets by surprise, and the yen would likely rise and stocks would fall, and JGBs would react to that," said Tomohiro Miyasaka, an analyst at Credit Suisse in Tokyo.

* Data on Tuesday reinforced expectations that the central bank will act to support the economy. Industrial production fell last month at its fastest pace since last year's disaster, and job availability dropped for the first time in more than three years.

* The yield curve steepened as superlong debt underperformed, with the yield on 20-year debt adding 1 basis point to 1.695 percent and yields on the 30-year bonds rising 1.5 basis points to 1.960 percent.

* Japanese Economics Minister Seiji Maehara kept steady pressure on the BOJ, saying on Tuesday that he wants it to pursue strong monetary easing to achieve its goal of a 1 percent rise in the consumer price index.

Maehara will attend Tuesday's meeting as a representative of the government, without a vote on monetary policy.

* The BOJ does not schedule the announcements of its policy decisions. JP Morgan analysts said in a note to clients that so far this year the timing of the announcement after meetings at which there was a change in policy came between 0330 GMT and 0507 GMT, with only one exception on April 10.

When the central bank holds policy steady, the announcement usually comes before 0330 GMT.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.