TOKYO, Sept 2 (IFR) - Japanese government bond prices
dropped on Tuesday, initially pressured by a weaker yen and
stronger equities and extending the declines after the results
of 10-year sale came in slightly below expectations.
The dollar rose to a high of 104.79 yen, its highest
level since January, while the Nikkei stock average
surged 1.5 percent.
This morning, the Bank of Japan did not offer to buy JGBs
under its massive asset purchase programme, as the Ministry of
Finance conducted its monthly 2.4 trillion yen ($22.91 billion
US dollar) 10-year JGB auction. MOF set the coupon of the new
10-year JGBs (issue number 335, due Sept. 20, 2024) at 0.5
percent, matching the record lowest level of June 2003.
The MOF this month extended the maturity of the new issue by
three months, with the payment date set for Sept. 22, which
coincides with a massive quarterly redemption of JGBs.
JGB players widely predicted the 10-year sale would proceed
smoothly on expectations that the BOJ would continue to buy JGBs
across the curve under its asset purchase program.
The lowest accepted price at the auction was 99.80 to yield
0.521 percent, with 63.463 percent of bids accepted. The
bid-to-cover ratio, a measure of demand, was a solid 3.58 times,
though below the last sale's 4.29 times.
The tail stemming from the gap between the average and
accepted lowest prices also widened to 0.03 from 0.01 at last
After the results, the yield on 5-year JGBs
was flat at 0.155 percent, while the yield on the current
10-year JGB added one basis point to 0.500
percent, compared to 0.490 percent at midday.
At the end of the morning session, the 20-year
and 30-year JGB yields were both
up 1.5 basis points at 1.340 percent and 1.640 percent,
The 10-year lead September JGB futures contract
moved down 0.09 point at 146.14, after finishing the morning
(1 US dollar = 104.7500 Japanese yen)
(Reporting by Masatsugu Hisatsune; Editing by Shri Navaratnam)