JGBs steady ahead of auction, helped by fall in stocks
TOKYO Dec 12 (Reuters) - Japanese government bond prices were steady to firmer on Thursday, helped by a fall in Tokyo share prices as well as structural support from the Bank of Japan's massive bond buying.
The market's immediate focus is on the five-year JGB auction on Thursday, though most players expect a solid outcome given limited availability of these maturities due to the BOJ's massive buying.
The 10-year JGB yield was flat at 0.655 percent , off a two-month high of 0.680 percent hit earlier this month on speculation the country's public pension fund could reduce its assets allocated to bonds.
Japanese share prices dropped 1.3 percent on Thursday, helping to underpin JGBs.
The market is also bolstered by the BOJ's two-year asset purchase scheme, in which it buys more than 7 trillion yen ($68 billion) of JGBs every month.
That helped to steadily bring down JGB yields, particularly at the short end of the yield curve, in just months. The five-year yield hit an eight-month low of 0.18 percent earlier this month.
The current five-year JGBs were untraded so far on Thursday.
The Ministry of Finance offered 2.7 trillion yen ($26 billion)five-year bonds with 0.2 percent coupon, the same level as the last two issues. The result of the auction is due at 12:45 p.m. (0345 GMT). Traders expect strong demand.
Longer maturities, however, fared less well, on expectations that the Ministry of Finance is likely to shift its bond issues towards the longer end of the curve next year to extend the overall maturity of its gigantic debt.
The 30-year bond yield was flat at 1.720 percent , unchanged from 10-week high hit on Wednesday.
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