Ten-year JGB yield dips ahead of U.S. jobs, superlongs underperform

TOKYO, March 8 Thu Mar 7, 2013 9:24pm EST

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TOKYO, March 8 (Reuters) - The benchmark 10-year Japanese government bond yield eased on Friday as investors were cautious before a key U.S. jobs report later in the day, although prices on superlong tenors slipped, extending their correction after a rally earlier this week.

* The 30-year yield added 1.5 basis point to 1.805 percent, extending its bounce off a 2-1/2-year low of 1.625 percent reached on Tuesday and ahead of an auction of 700 billion yen ($7.4 billion) of similar maturities later on Friday. The Ministry of Finance offers a coupon rate of 1.8 percent, the lowest since July 2003.

* The 10-year yield slipped 0.5 basis point to 0.665 percent and 10-year futures rose 10 ticks to 145.22, not far from their record high of 145.38, even though Tokyo's Nikkei share average jumped 2.1 percent.

* "People have priced in those domestic factors...the bullish factors out of Japan already. We are not certain about the U.S. outlook," said Maki Shimizu, senior strategist at Citigroup Global Markets Japan.

"It seems that risk-on trades are resuming, or maybe not. Payroll is the one key event that we need to monitor. The (JGB) market seems to be holding up well."

* Those upbeat domestic factors included pension funds rebalancing their portfolios after a surge in equities forced them to trim their share holdings from exceeding allocation limits and lead them to buy more bonds, and mounting expectations that the Bank of Japan will buy more longer-dated bonds under new leaderships from April.

* According to a Reuters survey of economists, U.S. employers probably added 160,000 jobs last month, a modest pick-up from January's 157,000 count, while the jobless rate was likely to be steady at 7.9 percent.

* The 20-year yield put on 2 basis points to 1.625 percent after sinking to a near 10-year low of 1.450 percent on Tuesday.

* The Nikkei has jumped 41 percent, triggered by the yen's weakness since mid-November after Prime Minister Shinzo Abe called for the BOJ to adopt aggressive monetary policy in his election campaign.

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