JGBs mostly rise after ECB easing move

Thu Jun 5, 2014 11:22pm EDT

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TOKYO, June 6 (IFR) - Japanese government bond prices ended the morning session on Friday mostly higher, after the European Central Bank's overnight rate cuts lifted German Bunds and U.S. Treasuries.

The ECB cut interest rates to record lows and took other steps to jump-start the euro zone economy.

For the first time, the ECB will charge banks for parking funds with it overnight to prompt them to instead lend to small- and medium-sized businesses.

Bank of Japan purchases also underpinned the JGB market. The BOJ offered to buy 150 billion yen ($1.46 billion) in JGBs maturing in more than 10 years, as widely expected, in addition to 300 billion yen in the 1-year to 3-year zone, and 200 billion yen in the 3-year to 5-year zone under its massive JGB purchase program.

Investors remained cautious ahead of the U.S. payrolls report for May due later in the session. The median forecast is for a solid increase of 218,000, but predictions range widely from as few as 110,000 to as many as 325,000.

Several regional banks bought 5-year to 10-year JGBs, sending 7-yr JGB yields down as much as 1.5 basis points on the day.

A few life insurers purchased the new 30-year JGBs on dips, pushing their yield down 0.5 basis point to 1.710 percent, compared with the average accepted yield of 1.715 at Thursday's 30-year sale.

At midday, the yield on the current 5-year JGBs was unchanged from Thursday at 0.175 percent, while the 10-year yield slipped 1 basis point to 0.605 percent, compared to 0.610 percent earlier in the session.

In the superlong zone, the 20-year yield slipped 1 basis point to 1.450 percent, compared with 1.460 percent earlier,

Ten-year lead June JGB futures moved in a range of 145.37 to 145.49 before finishing at midday up 0.16 point at 145.48. ($1 = 102.4750 Japanese Yen) (Reporting by Masatsugu Hisatsune; Editing by Eric Meijer)

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