JGBs slightly down ahead of this week's sales

TOKYO Sun Dec 2, 2012 10:05pm EST

Related Topics

TOKYO Dec 3 (Reuters) - Japanese government bonds slipped slightly on Monday ahead of auctions of longer maturities later this week, with benchmark yields rising above a 9-1/2-year low touched on Friday.

* The current 10-year cash JGB yield rose half a basis point to 0.710 percent, moving away from Friday's intraday low of 0.695 percent, which was its lowest level since June 2003 and the first time since then that it fell below 0.70 percent.

* The Ministry of Finance will offer 2.3 trillion yen of 10-year bonds on Tuesday and 700 billion yen of 30-year bonds on Thursday.

* The benchmark 10-year JGB futures price ended morning trade down 0.03 point at 144.83 after earlier rising to 144.90, its highest level since June 2003. Futures are not far from their record high of 145.09, also hit that month.

* The yield curve continued to steepen, with yields on 20-year bonds and 30-year bonds both rising 1.5 basis points to 1.685 percent and 1.955 percent respectively.

* The curve is likely to stay steep ahead of a general election on Dec. 16. Shinzo Abe, leader of the main opposition Liberal Democratic Party (LDP) and the front-runner to be Japan's next prime minister, has called on the Bank of Japan to take more drastic easing steps. This has pressured the yen as well as prices of superlong JGBs.

The latest polls showed the LDP still ahead, although its lead over the ruling party and a new group led by a nationalist former governor of Tokyo narrowed with two weeks left before the election.

* "There are people who want to buy at the 10-year auction, even with yields at these low levels," said a fixed-income fund manager at a Japanese trust bank.

"Ahead of the election, we are probably not going to see any big movements in JGBs," he said.

* A weekly gauge of sentiment in the Japanese government bond market remained negative but showed a slight improvement, with benchmark yields expected to stay in recent ranges ahead of this week's auctions.

FILED UNDER: