JGBs steady, BOJ buys longer-term bonds in purchase programme

Wed Aug 27, 2014 2:23am EDT

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TOKYO, Aug 27 (IFR) - Japanese government bonds were mostly steady on Wednesday, underpinned by Bank of Japan purchases.

The BOJ surprised some market participants in the morning when it offered to buy the new 40-year JGBs (re-opened issue number 7) and 5-year to 10-year JGBs under its massive JGB purchase programme. That helped dealers adjust their long positions on the last trading day this month on a settlement-date basis.

The central bank held around 56 percent of the current 40-year bonds as of Aug. 20 before Tuesday's first re-opening of the current issue, the latest BOJ data showed.

Until Tuesday, some pension funds had been selling JGBs across the curve, while index-linked pension funds were expected to buy long-term and superlong JGBs this week to lengthen the average duration of their portfolios for their month-end duration adjustments.

The yield on the current 5-year JGBs was flat at 0.155 percent, while the 10-year yield was flat at 0.495 percent. The 20-year yield was also flat at 1.330 percent, while the 30-year yield edged up half a basis point to 1.630 percent.

The 10-year lead September JGB futures contract ended up 0.05 point at 146.24, moving in a 146.15-146.28 throughout the session. (Reporting by Masatsugu Hisatsune; Editing by Jacqueline Wong)

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