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JGBs slip, taking cue from stronger stocks
December 1, 2016 / 6:50 AM / 10 months ago

JGBs slip, taking cue from stronger stocks

TOKYO, Dec 1 (Reuters) - Japanese government bonds mostly slipped on Thursday, taking their cue from stronger stocks after OPEC agreed to cut crude output for the first time since 2008 to support oil prices.

The oil output deal helped the Nikkei stock index end at an 11-month high.

The outcome of a sale of 10-year JGBs showed weaker demand than last month’s sale, although the results were not as bad as some investors feared, and the benchmark yield came off its earlier highs.

The 10-year yield rose half a basis point (bp) to 0.020 percent, down from a session high of 0.035 percent and below last week’s nine-month high of 0.045 percent.

December 10-year JGB futures ended down 0.06 point at 150.50, above their session low of 150.33.

The Ministry of Finance’s sale of 2.4 trillion yen ($21.1 billion) of 10-year JGBs with a 0.10 percent coupon drew bids of 3.78 times the amount offered, down from the previous sale’s bid-to-cover ratio of 4.35 times.

Some 40.6682 percent of the bids were accepted at the lowest price of 100.5900. The tail between the average and lowest accepted prices widened to 8 from that of last month’s offering of 1.

In the superlong zone, the 20-year yield added 3 bps to 0.475 percent, while the 30-year yield rose 2 bps to 0.590 percent.

Bank of Japan board member Makoto Sakurai said in a speech on Thursday that the central bank will continue to buy massive amounts of government bonds even under its new policy framework targeting interest rates.

“Our yield curve control is operating smoothly,” he told reporters later in the day, adding that bond yields were moving roughly in line with the central bank’s intentions.

The BOJ said on Wednesday that it plans to keep the amount of its bond purchases in all maturities unchanged in its initial market operations in December from November, buying a little over 9.0 trillion yen of JGBs this month. The BOJ has kept that pace since October.

$1 = 113.8800 yen Reporting by Tokyo markets team; Editing by Jacqueline Wong

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