TOKYO, Nov 1 (IFR) - Japanese government bond prices largely
held steady on Friday, though longer-maturities underperformed
after an auction of 300 billion yen ($3.1 billion) of old 20- to
40-year debt in an liquidity enhancement operation.
In quiet trading, seven-year to 20-year JGBs recovered most
of their earlier losses into the morning close, while 30-year
and 40-year JGBs remained modestly weaker.
Several regional banks have been selling domestic high-grade
non-JGB bonds for the last several sessions, as JGB yields have
fallen to a low of nearly six months.
Continued selling of corporate, utility, municipal and
agency bonds has weighed on the bond market, widening their
yield spreads over JGBs steadily, according to a few money
managers at domestic regional banks.
Meanwhile, a few megabanks were seen buying long-term and
super-long JGBs sporadically in thin trading, or receiving the
20s in the interest-rate swap market.
Dealers were also adjusting positions ahead of a long
holiday weekend. Japan's financial markets will be closed on
Monday for a national holiday.
The current 10-year yield was unchanged at
0.59 percent, ahead of next Wednesday's monthly 2.4 trillion yen
auction of similar maturities.
The 20-year yield rose 1 basis point to 1.495
percent, while the 30-year yield also rose 1
basis point, to 1.635 percent.