TOKYO, Dec 18 (IFR) - Japanese government bond prices traded
firmer on Wednesday, with better buying in superlong bonds, and
investors were fairly relaxed about the Federal Reserve policy
committee meeting, as they doubted whether the U.S. central bank
would taper its stimulus programme at this point.
The Federal Open Market Committee meeting will conclude its
two-day meeting later on Wednesday.
A big Japanese bank was suspected also of receiving 10-year
this morning, putting downward pressure on long-end tenors in
cash and swaps.
The Bank of Japan conducted JGB purchasing operations, which
also provided some support.
JGB futures jumped to 144.18 in the open, but the
upside stalled at 144.22, the lower-end of the Ichimoku cloud.
Futures then tested upside again and rallied to the
morning's high of 144.26, moving into the Ichimoku cloud. But
they then eased off to close at 144.19, up 11 ticks.
The bank that was suspected of receiving 10-years this
morning, was rumoured to have bought the new 20-year JGBs at
Tuesday's auction, which helped to improve market sentiment.
The 10-year swap rates dropped by 2.375 basis points on the
day, outperforming 10-year bonds which firmed by
just 1 basis point to 0.650 percent - a two-week low.
The BOJ entered into the bond market by buying 400 billion
yen ($3.89 billion) of five- to 10-year bonds and 200 billion of
superlong bonds, as part of its efforts to revive the world's
Although the market made no real reaction to the operations,
people were relieved as they had believed the market would fall
if the central bank refrained from carrying out the operations.
Cash bonds were firmer especially in the ultra long-end
sector. The 20-year yield was down 2 basis points
at 1.535 percent while the 30-year yield slipped
1.5 basis points to 1.710 percent.