Ten-year JGB yield rises, 30-year down ahead of auction

TOKYO Wed Oct 9, 2013 10:43pm EDT

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TOKYO Oct 10 (Reuters) - Yields on benchmark Japanese government bonds rose on Thursday, although that of the longer-dated 30-year debt eased ahead of an auction of the same maturity later in the day.

The Ministry of Finance was to sell 600 billion yen ($6.2 billion) of 30-year debt with a coupon rate of 1.8 percent.

"It is possible that superlong JGBs will fall out of favour now that the 20-year and 30-year yields have fallen below the apparent buying thresholds of 1.7 and 1.8 percent, respectively," analysts at Morgan Stanley MUFG wrote in a note.

"While the BOJ publishes only rough targets for its JGB-buying operations ... the results of its operation since June have shown a comparatively high allocation to the over 20-year sector. Such purchases may continue to provide non-negligible support from a supply/demand perspective."

The 30-year yield dipped 0.5 basis point to 1.635 percent, not far from a five-month low of 1.610 percent touched last week.

Yields on the 20-year debt were steady at 1.505 percent.

The 10-year yield was weaker, however, adding 1 basis point to 0.660 percent. The 10-year JGB futures were flat at 144.39.

Earlier, data showed Japan's core machinery orders rose faster-than-expected in August, posting its first rise in three months, in a welcome sign for capital spending seen as vital for durable recovery in the world's third-largest economy.

Japanese data also showed that in the wake of the U.S. fiscal impasse, Japanese investors sold a record amount of foreign bonds on a net basis last week, offloading nearly $23 billion worth.

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