* 10-year futures extend rise as stocks skid
* BOJ easing underpins sentiment, raises hopes of more
By Lisa Twaronite
TOKYO, Sept 20 Japanese government bonds rose on
Thursday, getting a lift from weaker stocks that prompted
investors to seek safer assets.
The Nikkei stock average skidded 1.6 percent as
Chinese manufacturing data raised fears about slowing growth in
Japan's biggest trading partner.
Bond market sentiment was also underpinned by the Bank of
Japan's move on Wednesday to ease policy. Although the immediate
market impact of the BOJ's announcement quickly faded, some
market participants hope the central bank will follow with more
The BOJ on Wednesday said it will increase its asset buying
and loan programme by 10 trillion yen to 80 trillion yen, with
the increase aimed at government bonds and treasury discount
The central bank also extended the deadline for meeting the
new overall target for asset purchases by six months, through
December 2013, with all of the additional purchases to be made
after December 2012. It also abandoned a rule limiting bond
buying to debt yielding 0.1 percent or higher.
"I don't see so much aggressiveness in this fund purchase,
so some market participants think the BOJ's next move will come
at its next meeting in October," said Tadashi Matsukawa, head of
Japan fixed income at Pinebridge Investments in Tokyo.
"They're doing more aggressive easing than the Fed in a
sense, because they're buying riskier assets," he added. "But in
the magnitude and the duration of purchases, you can say the Fed
is more aggressive than the BOJ."
The BOJ's asset purchase programme includes purchases of
exchange-traded funds and real estate investment trusts,
although the bank did not increase purchases of those assets in
its latest easing move.
The 10-year JGB futures contract for December ended
up 0.23 point at 143.80.
The yield on the benchmark 10-year cash bond
fell 1.5 basis points to 0.800 percent, edging back toward a
nine-year low of 0.720 percent hit in July. The benchmark yield
has traded in a relatively narrow range this month, between
0.775 percent and 0.835 percent.
The 20-year bond yield lost 1.5 basis points
to 1.680 percent and the 30-year yield shed half
a basis point to 1.940 percent after rising to a more than
five-month high of 1.950 percent.
The spread between 10- and 20-year yields stood at 0.880,
edging down from 0.885 on Wednesday on a last-traded basis, but
was still around its highest level since November 2010.
"With the curve so steep recently, we think it's almost time
to put on some 10/20-year flatteners, but except for that,
there're not many trades we're thinking about right now," said a
fixed-income fund manager at a European asset management firm in
"Yields at the front end are held in place by the BOJ policy
and don't move much," he said.
Data from the Ministry of Finance on Thursday showed the
impact of the slowing global economy on Japan, with exports
falling 5.8 percent in August from a year earlier. That helped
push its trade balance to a deficit of 754.1 billion yen and
raised fears about Japan's ability to sustain its debt in the
But separate BOJ data released on Thursday showed overseas
investors held a record 8.7 percent of outstanding Japanese
government debt at the end of the second quarter, totaling 82
trillion yen ($1.05 trillion). That was up 20 percent from the
same period a year earlier, as Europe's debt crisis prompted
more investors to diversify into what they perceived to be safer