JGBs dip on China data, disappointment over BOJ demand

TOKYO Tue May 7, 2013 10:24pm EDT

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TOKYO May 8 (Reuters) - Japanese government bonds dipped slightly on Wednesday as China's strong trade data lifted investor risk sentiment and on disappointment over a lack of bond buying by the Bank of Japan.

* The price of 10-year JGB futures dipped 0.11 point to 144.62, slipping further from a three-week high of 145.15 hit on Thursday.

* The 10-year Japanese government bond yield rose 1.0 basis point to 0.600 percent, though it is still comfortably within its trading range since late April between 0.55 and 0.65 percent.

* Chinese exports and imports rose more than expected in April, helping to boost regional stocks, including Japanese shares. The Nikkei share average rose more than one percent and hit a near-five-year high.

* Some traders were also disappointed the Bank of Japan did not conduct its bond buying on Wednesday. The central bank is by far the biggest single buyer of JGBs as it has committed itself to a two-year stimulus plan to buy 7.5 trillion yen bonds per month.

* Still, the BOJ's massive bond buying plan is limiting losses in the market and some analysts say JGBs should eventually strengthen as the BOJ will gobble up more bonds from the market.

* "As the BOJ is going to buy such a huge amount of bonds, and with market volatility falling, I expect JGB yields to gradually fall, to around 0.4 percent," said Yuya Yamashita, rates strategist at JPMorgan Chase.

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