JGBs firm; 30-year sale, primary dealers' meeting in focus

Wed Jan 9, 2013 10:15pm EST

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TOKYO, Jan 10 (Reuters) - Japanese government bond prices
gained on Thursday, as the market focused on a 30-year sale that
was expected to meet solid demand at current yield levels.
    
    * The Ministry of Finance is offering 700 billion yen of
30-year bonds, reopening of the No.37 issue which carries a 1.9
percent coupon.
    
    * "The superlong zone was oversold in recent weeks, so we're
expecting decent demand at these levels, particularly since
there were some bargain hunting yesterday," said a fixed-income
fund manager at a Japanese asset management firm in Tokyo.
    "But sometimes when the bonds rise even ahead of a sale,
there is some adjustment selling in the afternoon," he
cautioned.
        
    * Yields on 30-year bonds fell 1.5 basis
points to 1.990 percent, after they rose above 2 percent on
Tuesday for the first time since December 2011.
    Yields on 20-year bonds also slipped 1.5
basis points to 1.775 percent. 

    * Expectations of more easing this month from the Bank of
Japan have also bolstered bond market sentiment. The BOJ will
consider easing monetary policy again at its Jan. 21-22 meeting,
likely by increasing its 101 trillion yen ($1.2 trillion) asset
buying and lending programme, according to sources.
    
    
    * The 10-year JGB yield crept down half a
basis point to 0.815 percent, moving away from a 4-1/2-month
high of 0.840 percent hit on Monday.
    
    * The benchmark 10-year JGB futures contract ended
morning trade up 0.04 point at 143.47.    
    
    * Later on Thursday, the Ministry of Finance is scheduled to
hold regular meetings with JGB investors and primary dealers, to
discuss how it will allocate this year's additional issuance of
JGBs.
    The government will sell around 6 trillion yen more in
government bonds than it originally planned for fiscal 2012/13,
a government source told Reuters on Wednesday, as the government
prepares an extra budget with economic stimulus spending.
   
    The government is set to approve next Tuesday a 13.1
trillion yen extra budget. Around 10 trillion yen will be spent
on public works and incentives to spur corporate investment.
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