JGBs skid as stocks rise following brighter U.S. jobs picture

Mon May 6, 2013 10:50pm EDT

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TOKYO, May 7 (Reuters) - Japanese government bond prices
slipped on Tuesday as investors caught up after a long holiday
weekend and digested an upbeat U.S. employment report that
dimmed the appeal of safe-haven fixed-income assets.  
   
    * On May 2, the last trading day before a four-day long
holiday weekend here, the benchmark 10-year yield had skidded to
a nearly two-week low, bolstered by the Bank of Japan's
asset-buying operations.
    
    * "Before the holiday, bond sentiment was strong, but that
was before Friday's U.S. employment report. Some long positions
were built up, and they're now being taken off," said a
fixed-income fund manager at a Japanese trust bank in Tokyo.
     
    * The Nikkei stock average broke above 14,000 for
the first time since June 2008 as the market caught up after the
extended holiday and reacted to last week's strong U.S. jobs
data. 
           
    *  U.S. Treasury yields rose after U.S. employment
unexpectedly rose at a faster pace than expected in April and
hiring was much stronger than initially reported in the two
months prior to that. 
            
    * The 10-year yield rose 1.5 basis points to
0.570 percent after rising as high as 0.585 percent, and moving
away from its Thursday close of 0.555 percent, its lowest level
touched since April 19. 
    
    *  "Supply and demand continues to reflect BOJ buying
operations, as confirmed by last week's 10-year JGB auction. In
short, we believe it remains difficult to sell at 10-year yields
of 0.6 percent with the effective decrease in supply," said
Chotaro Morita, chief rates strategist at Barclays Securities
Japan.
     Many investors will probably continue to view 0.6 percent
as a dip-buying level for 10-year JGBs, he said in a note to
clients on Tuesday.
        
    * The 10-year futures contract finished morning
trade down 0.20 point at 144.92 moving away from Thursday's
intraday high of 145.15, which had been its highest peak since
April 8. 
    
    * Japan's finance ministry has no auctions of new or
reopened issues scheduled this week. On Wednesday, it will
conduct a liquidity-enhancement auction for old 20- and 30-year
bonds.
        
    * The superlong tenor underperformed, with the 20-year JGB
yield adding 3 basis points to 1.480 percent,
while the 30-year yield rose 2 basis points to
1.600 percent.
    
    * Over the long holiday weekend, Japan Exchange Group Inc.
said it will resume trading of 20-yr JGB futures from around
April 2014, after halting trade in 2002 due to inactivity.
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A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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