TOKYO Nov 16 Short-dated Japanese government
bond prices gained while debt with maturities of 10 years or
longer fell on Friday, on speculation the Bank of Japan may take
more aggressive easing steps following a likely change in
government after an election expected next month.
* Shinzo Abe, the head of Japan's Liberal Democratic Party
and front runner in the election, said on Thursday he wanted the
BOJ to consider zero or sub-zero interest rates.
* Prime Minister Yoshihiko Noda is expected to dissolve the
lower house of parliament on Friday for an election on Dec. 16.
Opinion polls have shown the LDP leading Noda's Democratic Party
* Short-dated notes reacted strongly to his comments, with
the five-year bond yield falling 0.5 basis point to 0.180
percent, edging near a nine-year low of 0.165
percent hit in August.
* Benchmark euroyen futures also hit a four-month high of
99.755, as Abe's comments sparked speculation that the
BOJ may scrap 0.10 percent interest payments on excess reserves.
* On the other hand, longer maturities dipped as Abe's
remarks on easing boosted Japanese stocks and also as the LDP's
policy platform for more public spending raised further concerns
about Japan's already dire fiscal condition.
* The 10-year yield rose 0.5 basis point to 0.735 percent
, with 0.730 percent becoming strong resistance in
the last few sessions.
* The 20-year yield climbed 1.5 basis point to 1.685 percent
, while the 30-year yield gained by the same
amount to 1.950 percent.
* The yield curve in the 'superlong' sector, maturities over
10 years, was at one of its steepest levels since trading in the
debt achieved some liquidity.
* The yield spread between 10 and 20 year bonds stood at 95
basis points, the highest level in recent years.
* "People are doing this for a short-term trading purpose.
In the long-run, given the U.S. fiscal cliff and concerns about
Europe, bonds will be supported," said Takeo Okuhara, fund
manager at Daiwa SB Investments.