JGBs rise slightly, but gains capped ahead of auction
TOKYO, Sept 9 (IFR) - Japanese government bond prices were slightly higher on Monday, driven by firmer U.S. Treasury yields despite a sharp rally in Tokyo stocks after the city won its bid to host the 2020 Olympic Games.
The Bank of Japan offered to buy 1 trillion yen worth of JGBs with residual maturities of one to 10 years, as part of its bond-buying programme to revive the economy.
One trader at a domestic brokerage expected the superlong sectors to turn weaker in afternoon trading on caution ahead of Tuesday's auction of 600 billion yen ($6.1 billion), 30-year bonds.
The 10-year yield was down 2 basis points at 0.765 percent, while the 10-year futures gained 0.28 point to 143.10.
Yields on benchmark 10-year U.S. Treasuries fell below 3 percent on Friday after data showing subdued U.S. jobs growth left traders wondering whether the Federal Reserve would reduce its bond purchase as promptly as some had thought.
The five-year yield dipped 1 basis point to 0.275 percent.
In the longer-maturities, both the 20- and 30-year yields slipped 1 basis point, to 1.695 and 1.820 percent, respectively.
The euphoria of Tokyo winning the 2020 Olympics drove the Nikkei to a five-week high, led by stocks expected to benefit from the event, with a sharp upward revision to second-quarter growth further boosting sentiment.
Japan's economy expanded much faster than initially expected in the second quarter, adding to growing signs a solid recovery is taking hold and heightening the case for Prime Minister Shinzo Abe to proceed with a planned sales tax hike next year.