TOKYO Oct 11 Longer-dated Japanese government
bonds slumped on Thursday ahead of a 30-year sale that was
expected to meet firm demand in light of that sector's recent
* The Ministry of Finance is offering 700 billion yen ($8.9
billion) of 30-year bonds with a coupon of 1.90 percent,
matching that of the previous sale, which had drawn decent
* "We are not expecting an eventful auction," said a
fixed-income fund manager at a Japanese asset management firm.
"It would be very surprising if there was little demand at
these levels, after superlongs have underperformed in recent
weeks," he said.
* The yield curve has steepened this week ahead of the
auction as investors sold to make room in their portfolios to
buy at the auction.
The spread between the 10-year and 30-year yields rose to
1.17 percentage points on Thursday, its widest since March 2008.
* Yields on 30-year debt rose 1.5 basis
points in cash trading to 1.940 percent, while those on 20-year
bonds rose half a basis point to 1.660 percent.
* The benchmark 10-year yield was flat at
* Ten-year JGB futures ended morning trade up 0.03
point at 144.21, after trading in a narrow range between 144.19
If futures' five-day moving average were to cross below the
200-day moving average, that might be a bearish technical
signal. The five-day average is now at 144.16 and the 200-day
average is at 144.12.
* "We continue to recommend buying 30-year asset swaps,
which remain attractively cheap and appear likely to outperform
in the event of JGB market selloffs," Morgan Stanley MUFG
strategists said in a note to clients ahead of the 30-year sale.
They added that 30-year asset swaps offer around 1 basis
point of carry over a half-year period, which would make them
suitable for bearish positioning in the longer term.