JGBs slip slightly as FOMC awaited for U.S. easing clues

Tue Jan 29, 2013 10:06pm EST

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TOKYO, Jan 30 (Reuters) - Japanese government bonds inched
lower on Wednesday, in line with U.S. Treasuries ahead of the
outcome of the U.S. Federal Reserve's two-day meeting later in
the session.    
         
    * The 10-year JGB yield added half a basis
point to 0.770 percent, moving 5 basis points above a six-week
low of 0.720 percent hit last week.
        
    * Investors will be parsing the Fed's policy statement for
any signals on when it might curb its bond buying. Any further
suggestion that the U.S. central bank could pare back or end its
latest round of quantitative easing before the close of 2013
could lead to a sell-off in Treasuries, which would in turn
likely push JGB yields higher.

    * "There probably won't be big moves in JGBs today head of
the Fed," said a fixed-income fund manager at a European asset
management firm.
    "It's possible to put on small positions in the meantime,
but when moves are very small, it's sometimes not even worth the
trading costs," he added.
    
    * The 10-year JGB futures contract ended morning
trade down 0.04 point at 144.03. 
        
    * Superlong maturities were slightly weaker, as investors
digested the government's issuance plan for fiscal 2013 JGB
issuance. The plan, released late on Tuesday, was mostly in line
with market expectations.
    
    * Japan will issue a record 156.6 trillion yen ($1.73
trillion) of JGBs through regular auctions in the fiscal year
from next April, including 42.8 trillion yen of bonds to finance
spending. 
    The finance ministry will also auction 600 billion yen of
consumer price-linked bonds next fiscal year due to interest
from overseas investors, but it has yet to decide the auction
schedule. 
    
    * Because of the large supplementary budget for the fiscal
year through March, "calendar-basis JGB issuance will increase
to a record high, and concerns over fiscal reform remain," Bank
of America Merrill Lynch said in a note to clients.
            
    * The 20-year yield added 1 basis point to
1.785 percent, and the 30-year bond yield also
rose 1 basis point to 2.005 percent.
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