JGBs mostly slip as stocks soar; BOJ expectations lift front end
TOKYO, Jan 18 (Reuters) - Japanese government bonds mostly slipped on Friday as a weaker yen lifted the stock market, while expectations of easing steps by the Bank of Japan next week lifted shorter maturities. * At its two-day meeting ending on Tuesday, the BOJ will consider scrapping its 0.1 percent floor on short-term interest rates and pledging to buy assets open-endedly until 2 percent inflation is foreseen, sources familiar with the central bank's thinking said. * The 10-year JGB yield added 1.5 basis point to 0.745 percent, moving away from Thursday's intraday low of 0.730 percent, its lowest since Dec. 17. * The 10-year JGB futures contract ended morning trade down 0.09 point at 144.29, on track to snap a five-session rising streak and pulling away from Thursday's intraday high of 144.50, which was its highest since Dec. 13. * Japan's Nikkei share average rose more than 2 percent on Friday as exporters gained on expectations that the central bank will ease monetary policy aggressively next week, putting more downward pressure on the yen. * "The rally in shares is taking demand away from JGBs overall, but expectations of more BOJ easing is limiting losses, and is pushing up short- and medium term notes," said a fixed-income fund manager at a Japanese asset management firm in Tokyo. * The yield on the 2-year JGB, which is often inactive in cash trading, slipped half a basis point to 0.070 percent, its lowest since July 2005. * The 5-year JGB yield also shed half a basis point to 0.150 percent, within sight of its record low of 0.145 percent hit during Japan's banking crisis in June 2003. * The superlong tenor dropped, with pension funds said to be selling, though yields remained well off highs hit a week ago. The yield on the 20-year bond added 2 basis points to 1.755 percent, moving back towards Jan. 11's high of 1.805 percent, its highest since April 2012. The 30-year bond yield rose 2 basis points to 1.990 percent, moving back toward Jan. 11's high of 2.025 percent, its highest since August 2011.
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