Benchmark JGBs erase gains after yield hits 5-month low

Fri Oct 4, 2013 1:16am EDT

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TOKYO, Oct 4 (IFR) - Japanese government bond prices erased most morning gains that had pushed the benchmark yield to a five-month low on Friday, as investors took profits ahead of the Bank of Japan's widely expected decision to hold policy steady.

The BOJ voted unanimously to maintain its pledge of increasing base money, or cash and deposits at the central bank, at an annual pace of 60 trillion ($617 billion) to 70 trillion yen.

It also left its economic assessment unchanged from last month, and issued a statement similar to the previous month's. The JGB market reaction was therefore very limited.

Early in the session, yields on the current 10-year , 20-year and 30-year JGBs hit fresh 5-month lows of 0.625 percent, 1.475 percent and 1.610 percent, respectively, on the back of modestly firmer U.S. Treasuries overnight and weaker Tokyo stocks.

But 10-year JGBs gave up most of their gains within 30 minutes after the market open, sending the benchmark 10-yr JGB yield up to a session high of 0.655 percent. It was last up 1 basis point at 0.645 percent.

In afternoon trade, the yield on the current 5-year JGBs was unchanged from Thursday's close at 0.215 percent, after earlier dropping as low as 0.210 percent, its lowest level since April 12.

In the super-long zone, the 20-year yield was flat at 1.490 percent, after falling as low as 1.475 percent, its lowest level since May 7.

The 30-year JGBs held onto modest gains with its yield shedding half a basis point to 1.610 percent, its lowest level since May 7.

Lead December JGB futures were down 0.03 point at 144.46.

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