Superlong JGBs underperform ahead of Friday's 30-year auction

TOKYO, March 7 Wed Mar 6, 2013 9:25pm EST

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TOKYO, March 7 (Reuters) - Japanese government bond prices eased on Thursday, with longer-dated debt underperforming ahead of an auction of 30-year bonds the following day and after data showed robust jobs growth in the U.S. private sector.

* But expectations that the Bank of Japan will step up its aggressive monetary easing helped support the shorter-end of the yield curve. The five-year yield was unchanged at 0.105 percent, not far from its record low of 0.095 percent.

* The 10-year yield added 1.5 basis points to 0.680 percent after sinking to a near 10-year low of 0.585 percent on Tuesday. Ten-year JGB futures, which are more liquid and tend to move opposite to yield, put on 3 ticks to 145.09.

* Investors expect the BOJ to hold off announcing new stimulus measures, after concluding its two-day policy meeting later in the day, until its next meeting on April 3-4 when Haruhiko Kuroda, an advocate of aggressive easing, is expected to be installed as the central bank's new governor.

* "The market is preparing itself for tomorrow's JGB 30-year auction. That's why the yield curve has steepened further," said Naomi Muguruma, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities.

* The 30-year yield gained 2 basis points to 1.780 percent as investors made room ahead of Friday's auction of 700 billion yen ($7.49 billion) worth of similar maturities, while the 20-year yield rose 3.5 basis points to 1.605 percent after sinking to a near 10-year low of 1.450 percent on Tuesday.

* U.S. private employers added 198,000 jobs to payrolls last month, better than economists' expectations for an increase of 170,000 and boding well for Friday's key nonfarm payrolls data in the United States.

Demand for a range of U.S. factory goods was also solid in January, suggesting economic activity is picking up in the world's largest economy and cutting the appeal of government debt, with the benchmark 10-year U.S. Treasury yield hitting a one-week high of 1.944 percent on Wednesday.

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