JGBs slip as U.S. Treasuries weaken on Fed tapering concerns
* Ten-year JGB futures fall in relatively light trade
* Longer-dated debt up 1 to 1.5 basis points
By Dominic Lau
TOKYO, Aug 16 (Reuters) - Japanese government bond prices slipped on Friday, tracking weakness in U.S. Treasuries, after encouraging U.S. jobs data increased expectations that the Federal Reserve will reduce its bond-buying stimulus programme as soon as next month.
The Bank of Japan's offer to buy 950 billion yen ($9.7 billion) worth of JGBs with residual maturities of one to 10 years provided some support to the market.
It was the central bank's third foray into the market this week, as part of its stimulus measures to revive growth in the world's third-largest economy.
The 10-year yield was up 1.5 basis point at 0.755 percent, crawling further above a three-month low of 0.730 percent touched on Tuesday.
Ten-year JGB futures fell 0.19 point to 143.84, with 18,488 contracts changing hands, up from Thursday's 13,943 and Tuesday's 17,759 but still sharply below this year's daily average of 30,702.
"If you compare the yield move for U.S. Treasuries, German Bunds and JGBs since this June, it seems that the JGB market is stable compared to Treasuries and German Bunds," said Tomohisa Fujiki, interest rate strategist at BNP Paribas in Tokyo.
"The reason behind that would be the aggressive purchasing by the BOJ. That would be also the supportive factor in today's market."
Yields on benchmark U.S. Treasuries jumped to two-year highs overnight after the number of Americans filing new claims for jobless benefits fell to a near six-year low last week and consumer prices rose broadly in July. The data backed the view that the Fed will soon roll back its $85 billion a month stimulus programme.
A Reuters poll on Wednesday showed a majority of economists expect the U.S. Federal Reserve to cut bond buying at its Sept. 17-18 policy meeting, with a consensus expecting the central bank would initially reduce purchases by $15 billion.
Data also showed foreign investors sold long-term U.S. securities for a fifth straight month in June. China, the largest foreign creditor, reduced its Treasury holdings to $1.2758 trillion, while Japan further trimmed its holdings to $1.0834 trillion.
China and Japan, which pared Treasury holdings for a third straight month, together accounted for about $40 billion of net Treasury outflows.
While the June data could fan fears of more foreign selling of U.S. Treasuries, analysts noted higher yields tend to attract funds and that in recent weeks Japanese investors have been buying foreign debt, most of which was likely to have been Treasuries.
The five-year JGB yield added 1 basis point to 0.280 percent.
Yields on longer maturities were also higher, with the 20-year debt up 1 basis point at 1.685 percent and the 30-year sector up 1.5 basis points at 1.815 percent.
The Ministry of Finance is to sell 400 billion yen of 40-year bonds on Tuesday, followed by an auction of 20-year debt on Aug. 27.
"The schedule of superlong JGB issuance will concentrate from next week into mid-September," Citigroup's Maki Shimizu wrote in a note.
"In the same timeframe, FOMC is scheduled and the deadline for the final decision on highly-focused consumption tax by Prime Minister (Shinzo) Abe will approach, both of which are more likely to shift volatility higher than lower."