JGBs slip, tracking Treasures after Fed announces bond buys
TOKYO, Dec 13 (Reuters) - Japanese government bonds fell on Thursday in line with U.S. Treasuries prices in the previous session, after the U.S. Federal Reserve announced a new bond buying programme. * The Fed said it will buy $45 billion in Treasuries each month on top of the $40 billion per month of mortgage-backed bonds it started buying in September. It will expand its purchases to five-year notes from the current seven-, 10- and 30-year Treasuries. It also took the unprecedented step of indicating interest rates would remain near zero until unemployment falls to 6.5 percent. The November rate was 7.7 percent. * The Bank of Japan will meet on Dec. 19-20, and will most likely increase its asset-buying and lending programme, currently at 91 trillion yen ($1.1 trillion), by another 5-10 trillion yen, sources have said. * "The Fed's move adds to pressure already on the BOJ to act next week," said a fixed-income fund manager at a European asset management firm in Tokyo. "But Treasuries sold off because investors expect the Fed's move to lift the economy, while further easing from the BOJ might not have the same effect here," he added. * Surging Japanese equities also undermined demand for JGBs. The Nikkei gained 1.6 percent to an eight-month high as the yen skidded to an 8 1/2 month low of 83.44 yen against the dollar. * The Ministry of Finance offer 2.5 trillion yen of 5-year notes on Thursday with a coupon of 0.2 percent, matching that of the previous seven sales. The 5-year yield rose half a basis point to 0.165 percent. * Japan's general election on Sunday is also likely to set the stage for more pressure on the BOJ to ease further. The opposition Liberal Democratic Party is likely to secure a majority, and its leader, Shinzo Abe, is likely to push the central bank to take aggressive monetary steps. * Yields on 10-year JGBs added 1 basis point to 0.710 percent, moving away from last week's low of 0.685 percent, which was the lowest since June 2003. * Ten-year JGB futures for March ended morning trade down 0.10 point at 144.60 point. * The superlong sector underperformed, with yields on 30-year JGBs and those on 20-year bonds both adding 2 basis points to 1.915 percent and 1.675 percent respectively. The Ministry of Finance will sell 1.2 trillion yen of 20-year debt on Dec. 18.
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