TOKYO Dec 10 Japanese government bonds were
slightly firmer on Monday, with benchmark 10-year yields moving
back towards a 9-1/2-year low hit last week on expectations for
more monetary stimulus.
* Underpinning bonds, revised government data released on
Monday showed Japan's economy contracted for a second straight
quarter in the July-September quarter, confirming a mild
* JGBs will likely tread water this week ahead of a national
election on Dec. 16, with the majority of respondents to this
week's market poll expecting yields to move sideways.
JGBs gained last week after Japanese media polls showed the
opposition Liberal Democratic Party was on track to secure a
majority in the election. LDP leader Shinzo Abe, likely to be
the country's next leader, has called for more aggressive
stimulus from the Bank of Japan.
* The central bank might even take further easing steps at
its final rate review for this year on Dec. 19-20. BOJ Deputy
Governor Kiyohiko Nishimura said last week the central bank
would debate whether further stimulus is needed to support the
* "JGB yields are pricing in more easing, but not pricing in
the expectation that the easy policy will have much effect
anytime soon," said a fixed-income fund manager at a Japanese
asset management firm.
* Yields on 10-year JGBs shed half a basis
point to 0.700 percent. On Thursday, they fell to 0.685 percent,
their lowest level since June 2003.
Yields on benchmark cash bonds ended 2011 at 0.980 percent.
* Ten-year JGB futures added 0.09 point to end
morning trade at 145.17, moving close to Thursday's intraday
high of 145.26, which was the highest level ever for 10-year
futures. The lead contract ended 2011 at 142.41.
The December contract will expire on Tuesday. The March
contract rose 0.06 point to 144.70.
* The superlong sector lagged slightly after gaining late
last week in the wake of a strong 30-year auction. The 20-year
yield added 1 basis point to 1.655 percent, while
the yield on 30-year JGBs was flat at 1.890