Superlong JGBs firm, yield curve flattens

Tue Feb 4, 2014 11:41pm EST

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TOKYO, Feb 5 (IFR) - Superlong Japanese government bond prices firmed on Wednesday, flattening the yield curve further as some domestic pension funds bought 30-year bonds.

A rise in longer-dated U.S. Treasury yields overnight had only a limited negative impact on superlong JGBs, market participants said.

In the morning session, a few domestic pension funds continued to buy the current 30-year JGBs. The 30-year yield fell as low as 1.570 percent in afternoon trading, its lowest level since early May. It was last down 2 basis points at 1.575 percent.

On Thursday, the Ministry of Finance will hold its monthly auction for 500 billion yen ($4.93 billion)of 30-year notes, reopening the current issue number 41 for the regular settlement date.

As expected, the Bank of Japan offered to buy 900 billion yen in JGBs maturing in more than 1 year and within 10 years.

The yield on the benchmark 10-year JGBs was flat at 0.600 percent, compared with an average accepted yield of 0.596 percent in the previous session's 10-year sale. Earlier, it fell to 0.595 percent, its lowest since November.

In the superlong zone, the yield on 20-year JGBs was down 1.5 basis points at 1.410 percent after earlier dropping as low as 1.405 percent, its lowest since mid-April.

Lead March JGB futures inched up 0.01 point to 144.83 in afternoon trade, after moving in a narrow 144.72-144.81 range in the morning session.

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