JGBs inch lower as traders await 10-year debt auction
TOKYO, Sept 3 (IFR) - JGB prices opened slightly lower on Tuesday, with 10-year yields nudging up 1 basis point as domestic real money accounts were largely sidelined ahead of the monthly 2.4 trillion yen ($24.16 billion), 10-yr JGB auction later in the day.
The new issue (#330 due Sept 2033) is trading around 0.775 percent on a when-issued basis. The Ministry of Finance is expected to set the coupon at 0.8 percent, unchanged from last month.
The MoF will extend the maturity by 3 months for the first time in 3 months. The payment date is Sept 20, the date of the massive quarterly redemption of JGBs.
Dealers and investors, therefore, can't sell the new 10s directly to the BoJ under its massive JGB buying program for the time being.
In addition, they can't earn extra income until the payment date. But the current yield level is widely expected to attract decent demand from investors who want to buy them to average down their costs.
JGB players are also awaiting Friday's crucial U.S. employment report and the results of Tokyo's bid for the 2020 Olympics due out early Sunday Tokyo time.
A relatively sharp rise in government bond yields in the UK and Germany has some negative impact on JGBs.
Yields on the current 5-year JGBs are indicated at 0.265-0.27 percent, vs 0.26 percent on Monday, while the current 10s (#329 @0.8 percent due June 2033) are up 1 basis point from Monday at 0.75 percent.
In the super-long zone, the 20s are up 2.5 basis points at 1.68 percent, vs 1.67 percent (+1.5bp) earlier. JGB futures are down 0.13 at 144.04, moving in a 144.00-144.07 range.