TOKYO Feb 13 Japanese government bonds were
mostly flat on Wednesday though longest maturities held firm on
expectations that an ongoing auction of 40-year JGBs will
attract solid demand.
* The immediate focus is on a quarterly auction of 400
billion yen ($4.25 billion) 40-year JGBs. The Ministry of
Finance on Wednesday reopened the 40-year bonds maturing March
2052. The auction closes at noon (0300 GMT) and the result will
be announced at 12:45 p.m. (0345 GMT).
* Market players expect solid demand for the new offer as a
sharp fall in short-term notes yield in the past couple of weeks
has made long-dated bonds relatively more attractive.
* The current 40-year bonds were yielding 2.14 percent
, down 1.0 basis point on the day while the
yield of the more liquid 30-year bonds also dipped 1.0 basis
point to 1.960 percent.
* Still, the yield spread between 30- and five-year bonds
stood at 182.5 basis points, near a seven-year high of 186.5 hit
* The five-year yield held at 0.135 percent,
matching the record low on expectations that the Bank of Japan
will continue to pursue aggressive easing steps to shore up the
* "Given strong expectations of bold monetary easing,
short-term yields are likely to stay at current low levels for
some time," said Katsutoshi Inadome, strategist at Mitsubishi
UFJ Morgan Stanley Securities.
* The yield on the 10-year cash JGBs stood flat at 0.745
percent while the 10-year JGB futures price rose
0.03 point to 144.33.