TOKYO Feb 15 Japanese government bonds rose on
Friday, with the 30-year yield hitting a seven-week low as life
insurers nibbled at longer-dated debt while some hedge funds
appeared to be cutting their bearish bets.
* "We are hearing that some of the hedge funds are taking
profit on yen-short position, unwinding the steepening trade,"
said Tadashi Matsukawa, head of Japan fixed income at PineBridge
Investments. "Whenever the yen weakens, the yield curve
* The yen was quoted at 92.76 to the dollar on Friday, up
from a 33-month low of 94.465 touched on Feb. 11. A halt in the
yen's downtrend also took the wind out of equities, with Tokyo's
Nikkei benchmark down 1 percent on Friday morning.
* "Life insurance companies are currently buying 20-, 30-,
40-year (paper). That kind of absorbs a lot of inventories that
we have," Matsukawa said.
* The 30-year yield dipped 1 basis point to
1.945 percent, its lowest level since Dec. 25, while the 20-year
yield inched down 0.5 basis point to 1.750
* Yields on benchmark 10-year bonds slipped 2
basis points to 0.750 percent. Ten-year JGB futures
rose 22 ticks to 144.26, breaking above their five-day moving
average of 144.24.
* "Ten-year JGBs are just trading around 0.7 and 0.8
percent. Whenever there are dips, there are buyers," Matsukawa
said. "Whenever they get to the lower 0.7 percent, 0.72 or 0.73
percent, we see profit taking."
* The five-year yield returned to a record low
of 0.135 percent after adding 1 basis point to 0.145 percent in
the previous session.
* The short-end of the yield curve has been supported by
expectations that the Bank of Japan will step up its asset
purchases to meet a 2 percent inflation target, while longer
maturities have come under pressure due to the aggressive
reflationary policies pursued by the new government of prime
minister Shinzo Abe.