TOKYO Oct 5 Japan government bonds were mostly
lower in relatively thin trade on Friday as stronger equities
decreased the appeal of fixed-income assets, but investors were
reluctant to make major moves ahead of a Bank of Japan policy
decision later in the session.
* The BOJ is expected to maintain the status quo at the
conclusion of its two-day policy meeting, as it continues to
monitor the impact of easing steps it took at last month's
* Ten-year JGB futures ended morning trade down
0.07 point at 144.10, moving away from an eight-week high of
144.33 hit on Wednesday.
* In cash bond trading, the current 10-year note was
untraded. Two older issues traded down, with the yield on issue
number 324 adding one basis point to 0.750 percent and that on
issue number 323 also adding a basis point, to 0.745 percent.
Benchmark yields hit an eight-week low of 0.755 percent on
Tuesday and Wednesday.
* The superlong sector underperformed, with the 20-year
yield and the 30-year yield both
adding 1.5 basis points to 1.660 percent and 1.915 percent,
* "It's quiet among domestic investors despite the start of
new fiscal half-year and a new quarter as well. Sometimes, a new
period starts with profit-taking, and if there's nothing to take
profits on, it starts with accumulating bond positions in this
kind of environment," said Maki Shimizu, senior strategist at
Citigroup Global Markets Japan.
However, such accumulation has begun slowly against the
current backdrop, she said.
"The views are quite divided among domestic investors and
dealers. It doesn't meant they can't take either direction, but
rather, some were expecting more of a rise in yields from autumn
onward, but then there was heightened concerns about the global
slowdown," said Shimizu.
* Sapping demand for safe-haven assets, signs of progress
have emerged in Europe's debt crisis. On Thursday, European
Central Bank President Mario Draghi said, after the ECB helped
policy steady, that the bank has a "fully effective backstop
mechanism in place" to buy the bonds of troubled euro zone
states such as Spain when they request aid.
* But even as the euro zone worked toward alleviating the
burden of debt-burdened countries, investors also fretted about
the fallout on global growth, which has kept JGB yields from
* "In the case of JGBs, there is the problem of a possible
slowdown in China affecting Japan's economic fundamentals," said
Arihiro Nagata, head of foreign bond trading at Sumitomo Mitsui