TOKYO Feb 12 Japanese government bonds were
mostly supported on Tuesday as longest maturities outperformed
partly on buying from investors rebalancing their portfolio
after sharp gains in Japanese equities.
* The market, particularly at the short end, was also
bolstered by expectations that the Bank of Japan is likely to
step up its monetary easing in coming months.
* The 30-year bond yield fell 1.5 basis point to 1.975
percent, outperforming shorter maturities while
the 20-year bond yield fell 0.5 basis point to 1.770 percent
* Some passive fund mangers appeared to be buying bonds as
recent gains in Japanese shares prices made their portfolio too
overweight on stocks, said Naomi Muguruma, senior strategist at
Mitsubishi UFJ Morgan Stanley Securities.
* Japan's Nikkei share average has risen almost a
third since mid-November. On Tuesday it climbed 2.4 percent to
edge near its 33-month high as the yen weakened after a U.S.
Treasury official voiced support for Japan's aggressive policies
to combat deflation and boot growth.
* The strength of "superlong" bonds also pointed to the
market's optimism on an auction of 400 billion yen ($4.25
billion) 40-year JGBs on Wednesday.
* Short-term note yields were stuck at historic lows, with
the five-year yield flat at its record low of 0.135 percent
* On the other hand, the 10-year bond yield rose 0.5 basis
point to 0.760 percent as banks took profits in
that tenor, ahead of their annual book-closing at the end of
* The 10-year JGB futures price also fell 0.05 point to