* 20- and 30-year yields also fall to 5-month low
* 10-year JGB futures climb to 5-month high
TOKYO Oct 23 Japanese government bond prices
rose on Wednesday, with the 10-year yield hitting a five-month
low, buoyed by gains in U.S. Treasuries after slower U.S. job
growth reduced expectations the Federal Reserve will cut its
stimulus this year.
The 10-year yield was down 1 basis point at
0.605 percent after earlier touching 0.600 percent, its lowest
since May 9.
Yields on longer maturities also fell to a five-month low,
leading to a flattening of the yield curve. The 30-year yield
eased 2.5 basis points to 1.580 percent and the
20-year yield fell 2 basis points to 1.450
Overnight, yields on benchmark 10-year U.S. Treasuries
fell 9.7 basis points to 2.512 percent to their
lowest level since July 24 after data showed September job
growth slowed to its weakest pace in 15 months.
A Reuters polled conducted on Tuesday showed nine of 15 U.S.
primary dealers see the Fed tapering in March, with many of them
blaming Washington's fiscal impasse for having a "significant"
impact on the Fed's timing to scale back its stimulus.
In addition, the Bank of Japan offered on Wednesday to buy
800 billion yen ($8.2 billion) worth of JGBs with residual
maturities of between one and more than 10 years, as part of its
bond-buying programme to revive the world's third-largest
JGB yields have been on a downtrend lately, helped by buying
this month from Japanese investors including pension funds and
life insurance companies. October is the start of the second
half of Japan's fiscal year.
Nippon Life Insurance plans to increase its yen bond
holdings in the six months to March but is also ready to buy
foreign bonds as well if it can buy dollars and euros on dips,
the company said on Tuesday.
Although the BOJ's aggressive monetary policy in April
sparked speculation that many Japanese life insurers might rush
into foreign bonds to earn higher returns, Nippon Life's stance
is a reflection of little change in industry investment
But Barclays Capital analysts said they were wary about
chasing JGB prices higher as buying by Japanese investors may
run its course in the second half of October.
"Although the room for flattening in 10s and longer could be
tested again toward month-end, we believe participants should
avoid chasing any decline in 10-year yields," they wrote in a
Ten-year JGB futures added 0.15 to 144.94, hitting
their highest in five months.