Benchmark JGBs inch down as investors lock in gains

TOKYO Thu Dec 6, 2012 9:45pm EST

Related Topics

TOKYO Dec 7 (Reuters) - Benchmark Japanese government bonds slipped on Friday, as some investors locked in gains after a rally in the previous session on heightened monetary easing expectations sent 10-year yields to a 9 1/2 year low.

* The superlong sector outperformed, with 30-year bonds rising after the previous day's auction of that maturity met strong demand.

* Ten-year JGB futures ended morning trade flat at 145.22, with the contract inching up to an intraday record high of 145.26. Thursday's close was the highest ever for 10-year futures.

* Thursday's rally came after Japanese media polls showed the opposition Liberal Democratic Party is on track to secure a majority in Japan's Dec. 16 election. LDP leader Shinzo Abe has called for more aggressive stimulus from the Bank of Japan.

Abe's suggestions included setting an inflation target of 2 percent, embarking on "unlimited easing", and cutting interest rates to zero or below.

* Yields on 10-year JGBs added half a basis points to 0.690 percent. On Thursday, they fell to 0.685 percent, their lowest level since June 2003.

* "Abe's ideas first led to buying of short- and medium-term JGBs, while the superlongs sold off, but they cheapened to a point where Thursday's sale drew buying interest," said a fixed-income fund manager at a Japanese trust bank.

* Yield on 30-year JGBs fell 1 basis point to 1.880 percent, after earlier dropping as low as 1.875 percent, their lowest level since Sept. 27. On Thursday, 30-year yields fell 5.5 basis points.

The 20-year yield was flat at 1.640 percent.

* The yield curve flattened, pushing the spread between 10- and 30-year yields down to 119 basis points from 125.5 points on Tuesday, which was its highest level since early 2008.

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