TOKYO, April 18 Japanese government bond prices
mostly rose on Thursday, getting a lift from a downturn in
investors' appetite for risk but kept in check by wariness about
this session's sale of 1.2 trillion yen worth of 20-year debt.
* The Ministry of Finance offered the newly issued bonds
with a coupon of 1.5 percent, below the 1.6 percent coupon on
the latest issue.
* Disappointing demand at a sale of 30-year bonds a week ago
raised concerns that many investors were sidelined by recent
volatile market conditions, after the Bank of Japan's radical
monetary policy overhaul on April 4.
* "Until we have more clarity over the Bank of Japan's
purchasing, JGB trade will remain volatile, and the kind of
institutions who buy superlong debt will wait to buy," said a
fixed-asset fund manager at a Japanese asset management firm.
* On Wednesday evening, the BOJ held its second meeting with
JGB market participants to discuss its new monetary policy
framework, under which it will double its bond purchases in two
A senior BOJ said after the meeting that the central bank
will consider increasing the frequency of its purchases of
long-term JGBs in response to dealers' concerns about market
* Strategists at Barclays Japan recommended a
10-year/20-year flattener going into today's auction.
"With the aggressive market moves since the April 4
[monetary policy meeting], realized volatility has almost
tripled in the 20-year sector," the said in a note clients.
"Therefore, it is reasonable to assume a longer tail for
today's 20-year JGB auction, and it is possible to establish
flattener at reasonably cheap levels," they said.
* Yields on benchmark 10-year bonds were flat
at 0.600 percent, while ten-year futures ended morning
trade up 0.12 point at 144.21. Bonds benefitted from weaker
stocks and commodities, which sagged on continuing concerns
about global growth.
* The superlong sector fared well in morning trade, though
volume was thin. The 30-year yield and the
20-year yield both fell 3.5 basis points to 1.610
percent and 1.485 percent respectively.
* Weekly data from the ministry of finance showed that
Japanese investors did not seek overseas debt despite the recent
domestic market volatility, with last week showing net selling
of foreign bonds to the tune of 332 billion yen.
Expectations of a surge of Japanese cash into overseas debt
has pushed down yields in many bond markets around the world.