JGB prices steady after Tuesday's sharp gain

Tue Jan 7, 2014 10:06pm EST

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TOKYO, Jan 8 (IFR) - Japanese government bond prices were largely steady on Wednesday after a rally in the previous session, which saw the 10-year yield falling to a one-week low.

The 10-year yield was up 0.5 basis point at 0.700 percent after dropping 3 basis points on Tuesday, its biggest one-day fall in 3-1/2 months, on the back of a robust debt auction of the same maturity.

Ten-year JGB futures dipped 2 ticks to 143.79, holding below their 14-day moving average of 143.81.

The Bank of Japan, as widely expected, offered to buy 900 billion yen ($8.6 billion) worth of JGBs in the secondary market with residual maturities of one to 10 years, as part of its effort to pull the world's third-largest economy out of persistent deflation.

Both the 20-year and the 30-year yields were unchanged at 1.545 and 1.705 percent, respectively. Yields on both maturities fell 2 basis points on Tuesday.

The Ministry of Finance will sell 300 billion yen of inflation-linked 10-year JGBs on Thursday.

In October, the government sold 300 billion yen of the 10-year inflation-linked JGBs, its first in five years, with strong demand.

Japan suspended issue of inflation-linked bonds in 2008, when the global financial crisis threw the country back into deflation and caused massive losses on inflation-linked JGBs.

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