JGBs steady as investors await Japan growth plan

Mon Jun 23, 2014 11:03pm EDT

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TOKYO, June 24 (IFR) - Japanese government bond prices were steady on Tuesday, as investors waited for the Japanese government to deliver its latest instalment of long-term economic policies later in the day.

Japanese Prime Minister Shinzo Abe will detail his so-called "third arrow" policies including phased corporate tax cuts and reforms for the $1.26 trillion Government Pension Investment Fund (GPIF), the world's biggest pension fund.

The Ministry of Finance conducted a 400 billion yen ($3.92 billion) liquidity enhancement auction of off-the-run 10-year and 20-year JGBs, and trading related to this accounted for most of Tuesday's market activity.

Some investors sought 10-year JGBs maturing in around 5 years (issue #302, due June 2019, and issue #303, due Sept 2019), which sent their yields down 1 to 1.5 basis points from the previous session.

In the latest liquidity enhancement auction on May 22, those two issues accounted for more than 90 percent of the total issue amount, with issue #302 comprising more than half, at 203 billion yen; and #303 accounting for 167 billion yen. Some investors were forced to cover their short positions, market participants said.

Cash activity in the long-term and super-long JGBs was limited to transactions among dealers, according to JGB traders.

At midday, yields on the current 10-year, 20-year, and 30-year JGBs were unchanged from the previous session at 0.580 percent, 1.450 percent and 1.710 percent, respectively

Ten-year lead September JGB futures moved in a range between 145.39 and 145.46 range and ended the morning session up 0.06 point at 145.44. ($1 = 102.0500 Japanese Yen) (Reporting by Masatsugu Hisatsune; Editing by Kim Coghill)

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