Ten-year JGB yield inches down, superlongs underperform; focus on BOJ

TOKYO, April 3 Tue Apr 2, 2013 10:29pm EDT

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TOKYO, April 3 (Reuters) - Yields on benchmark 10-year Japanese government bonds inched down on Wednesday ahead of the outcome of Bank of Japan's two-day meeting on Thursday, though superlongs underperformed, giving up some of the previous session's gain.

* The 10-year yield ticked down 0.5 basis point to 0.555 percent, not too far from a near-decade low of 0.510 percent reached last week.

* Ten-year JGB futures rose 0.12 point to 145.48. The futures hit a record high of 145.98 last week.

* "The JGB yield curve will be dictated by the BOJ. It's pretty much like what the Fed is doing to the curve," said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.

"I think people are putting too much attention to the meeting this week. The anticipated aggressive easing by (BOJ Governor Haruhiko) Kuroda is a multi-month move. It will take time to implement. It's not going to come overnight."

* Many market players expect the BOJ to increase its bond buying and extend the maturity of its bond purchases, though there is no clear consensus as to exactly what the central bank will do.

* Fujita said he expected Kuroda will embark on an unprecedented level of monetary easing, leaving little room for JGB yields to rise. "It's going to overwhelm every single investor out there," he said.

* Longer maturities underperformed after their strong showing in the previous session. The 30-year yield crept up 0.5 basis point to 1.515 percent, just shy of its near-decade trough of 1.500 percent touched on March 29.

* The 20-year yield also edged up 0.5 basis point, to 1.390 percent. It hit a near-decade low of 1.360 percent last Friday.

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