TOKYO Dec 20 Japanese government bonds rose on
Thursday, pushing benchmark yields away from a nearly 7-week
high hit in the previous session, as investors await the
conclusion of a Bank of Japan meeting at which it is expected to
take further easing steps.
* The BOJ is expected to deliver its third dose of monetary
stimulus in four months after its two-day meeting, with more
aggressive action seen as likely next year, as the central bank
faces intensifying pressure from Shinzo Abe, the country's next
leader, to boost efforts to beat deflation.
For now, the BOJ will likely stick to its existing framework
of expanding its 91-trillion-yen ($1 trillion) asset buying and
lending programme, probably by 10 trillion yen, analysts say.
The BOJ will also announce details of a new loan programme
on Thursday that it unveiled in October to supply banks with
cheap long-term funds without limiting the amount of cash made
* Yields on cash 10-year JGBs fell 2 basis
points to 0.760 percent, after rising as high as 0.780 on
Wednesday, their highest level since Nov. 2.
* The 10-year JGB futures contract was on track to
snap a five-session losing streak, ending morning trade up 0.20
point at 144.08. On Wednesday, futures hit an intraday low of
143.70, their lowest since Sept. 20.
* A stock-market correction also added to the appeal of
safe-haven fixed income assets. The Nikkei stock average
slumped 1 percent, after a rally on Wednesday pushed the
index to end above 10,000 for the first time since early April.
* "Some adjustments are to be expected after Wednesday's
market moves, although the JGB market activity is not so active
as investors await the BOJ," said a fixed-income fund manager at
a Japanese asset management firm in Tokyo.
"We need to get the BOJ meeting out of the way," he added.
* The recently battered superlong sector outperformed on
Thursday, with life insurers said to be buying, though flows
were said to be light. Long maturities suffered in recent weeks
amid concern that Abe's reflationary policies could lead to
inflation in the long term.
Yields on 20-year bonds fell 2.5 basis points
to 1.720 percent after rising as high as 1.750 percent in the
previous session, their highest since early April.
Yields on 30-year bonds lost 3.5 basis points
to 1.955 percent.