TOKYO Dec 7 Benchmark Japanese government bonds
slipped on Friday, as some investors locked in gains after a
rally in the previous session on heightened monetary easing
expectations sent 10-year yields to a 9 1/2 year low.
* The superlong sector outperformed, with 30-year bonds
rising after the previous day's auction of that maturity met
* Ten-year JGB futures ended morning trade flat at
145.22, with the contract inching up to an intraday record high
of 145.26. Thursday's close was the highest ever for 10-year
* Thursday's rally came after Japanese media polls showed
the opposition Liberal Democratic Party is on track to secure a
majority in Japan's Dec. 16 election. LDP leader Shinzo Abe has
called for more aggressive stimulus from the Bank of Japan.
Abe's suggestions included setting an inflation target of 2
percent, embarking on "unlimited easing", and cutting interest
rates to zero or below.
* Yields on 10-year JGBs added half a basis
points to 0.690 percent. On Thursday, they fell to 0.685
percent, their lowest level since June 2003.
* "Abe's ideas first led to buying of short- and medium-term
JGBs, while the superlongs sold off, but they cheapened to a
point where Thursday's sale drew buying interest," said a
fixed-income fund manager at a Japanese trust bank.
* Yield on 30-year JGBs fell 1 basis point to
1.880 percent, after earlier dropping as low as 1.875 percent,
their lowest level since Sept. 27. On Thursday, 30-year yields
fell 5.5 basis points.
The 20-year yield was flat at 1.640 percent.
* The yield curve flattened, pushing the spread between 10-
and 30-year yields down to 119 basis points from 125.5 points on
Tuesday, which was its highest level since early 2008.