JGBs slip, tracking U.S. Treasuries after Fed minutes

Thu Aug 21, 2014 12:18am EDT

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TOKYO, Aug 21 (IFR) - Japanese government bond prices slipped on Thursday, tracking U.S. Treasuries which fell after minutes of the latest Federal Reserve meeting suggested a rate increase could come sooner rather than later.

One Japanese megabank sold the current 5-year and 10-year JGBs in relatively large lots, ahead of this session's monthly 400 billion yen ($3.85 billion) add-on sales of off-the-run 10-year and 20-year JGBs.

The Bank of Japan refrained from making any purchases under its massive asset-buying programme, as it typically does on days when the Ministry of Finance conducts a sale.

A stronger U.S. dollar and rising Tokyo stocks also had some negative impact on JGBs. The dollar briefly rose to as high as 103.96 yen, its highest level since April, while the Nikkei stock average was up 0.7 percent.

In minutes of its July 29-30 policy meeting released on Wednesday, the Fed cited the quick recovery in the U.S. labour market but said it doesn't want to bring forward a planned rate hike until the recovery looks more convincing.

That helped lift the yield on the benchmark 10-year U.S. Treasury note to a one-week high of 2.446 percent on Wednesday.

JGBs rose in tandem, with the yield on the current 2-year JGBs adding 0.5 basis point from Wednesday to 0.075 percent, while the 5-year JGB yield rose 1 basis point to 0.165 percent, its highest level since July 7.

Both the 10-year yield and the 30-year yield rose 2 basis points to 0.530 percent and 1.675 percent, respectively, while the 20-year yield was up 2.5 basis points at 1.375 percent, compared with Tuesday's average auction yield of 1.342 percent.

The 10-year lead September JGB futures contract lost 0.14 point to 145.88.

($1 = 103.8600 Japanese yen) (Reporting by Masatsugu Hisatsune; Editing by Jacqueline Wong)

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