TOKYO Nov 19 Benchmark Japanese government
bonds started the week with a slightly lower tone, pressured by
a weaker yen that bolstered stocks but not moving much from
recent ranges as the Bank of Japan began its regular policy
* The yen dropped to its lowest level in nearly seven
months, on expectations the new government will implement more
fiscal stimulus and pressure the BOJ into easing further.
* Japanese Prime Minister Yoshihiko Noda dissolved
parliament on Friday for an election on Dec. 16, at which his
ruling party is expected to fare poorly. Main opposition party
leader Shinzo Abe, likely Japan's next prime minister, has
called for the country's central bank to adopt interest rates of
zero or below zero.
* The BOJ is expected to hold policy steady at the
conclusion of its two-day meeting on Tuesday. It could hold off
on any further stimulus steps until early next year, as it
considers the policies of Japan's next government.
* "The yen weakened today, so stocks strengthened, so JGBs
weakened slightly, but mostly, the market is waiting for the BOJ
meeting to be over, although nothing is expected," said a
fixed-income fund manager at a Japanese trust bank.
"The superlong tenor had just been coming back a bit, when
last week Abe's remarks sent the yield curve sharply steepening
again, and there is a perception that this might be overdone,"
* The 10-year JGB futures contract ended morning
trade down 0.05 point at 144.65.
* In cash trading, 10-year yields rose 1
basis point to 0.735 percent, moving away from support at July's
nine-year low of 0.720 percent.
* Yields on 20-year debt and on 30-year bonds
were flat at 1.680 percent and 1.950 percent,
On Friday, the yield spread between the 10- and 20-year debt
rose to its highest level since 1999.
* A weekly gauge of sentiment in the Japanese government
bond market worsened as investors expected that a likely change
of government will lead to more aggressive monetary and fiscal
stimulus steps and a steeper yield curve, a Thomson Reuters
survey found on Monday.