JGB prices slightly weaker ahead of 5-year debt sale

Tue Nov 12, 2013 9:26pm EST

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TOKYO, Nov 13 (IFR) - Japanese government bond prices were slightly weaker on Wednesday, with the five-year yield up ahead of the Ministry of Finance's auction of 2.7 trillion yen ($27 billion) worth of five-year bonds on Thursday.

The five-year yield added 0.5 basis point to 0.205 percent, but was still near a seven-month low of 0.190 percent touched on Nov. 1.

Judging by current market conditions, traders expect the ministry to reopen the current five-year bonds in Thursday's sale, making it easier to sell the bonds short before covering them in the auction.

The Bank of Japan on Wednesday offered to buy 600 billion yen of JGBs in the secondary market with residual maturities of five to more than 10 years, as part of its effort to revive the world's third-largest economy.

The 10-year yield was up 0.5 basis point at 0.60 percent. It hit a six-month low of 0.580 percent last Friday.

Ten-year JGB futures were little changed at 144.96.

The 30-year yield was also up 0.5 basis points, at 1.620 percent.

Japan's core machinery orders fell more than expected in September and firms expect orders to fall further in the current quarter, showing that business investment remains the weak link in generating a sustained economic recovery.

Economic growth in the July-September quarter may also have slowed as consumer spending and exports moderated, a Reuters survey found. The Cabinet Office is to release the July-September GDP figures on Thursday.

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