JGBs steady, shrugs off weaker U.S. Treasurys; focus on BOJ

Tue Sep 3, 2013 10:13pm EDT

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TOKYO, Sept 4 (IFR) - Japanese government bond prices opened slightly higher on Wednesday, shrugging off a rise in U.S. Treasury yields overnight, with the focus shifting to the Bank of Japan's policy-setting meeting.

JGB players expect the BOJ, which began its monthly two-day policy board meeting on Wednesday, to keep its current monetary policy stance intact.

In the secondary market, the BOJ offered to buy 600 billion yen worth of JGBs with residual maturities of five to more than 10 years under its massive bond-buying programme.

Yields on the current 5-year JGBs were indicated at 0.265 percent on the offer, unchanged from Tuesday's level, while the new 30s (#330) were down 0.5 basis point at 0.76 percent.

The 20s were flat at 1.80 percent. JGB futures are up 0.09 at 144.10, moving in a 144.03-144.17 range. JGB futures rose to as high as 144.17 (+0.16) when an earthquake hit Tokyo around 0020 GMT

In morning trade, a few regional banks sold 5-year JGBs, while other domestic institutional investors were seen largely sidelined ahead of Thursday's BOJ decision, Friday's U.S. non-farm payroll data, and the results of Tokyo's bid for the 2020 Olympic Games due on Sept. 7.

The Nikkei newspaper reported that domestic corporate bond issuance sharply increased to 6.38 trillion yen from January to August, the highest level since 2009.

In August, corporate bond issuance in the 10-year and longer zone accounted for around 40 percent of the total issued in the month. The Nikkei report, however, had only a limited negative impact on JGBs.

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