TOKYO Feb 20 Japanese government bond prices
eased on Wednesday ahead of a 20-year JGB auction the following
day and on a rally in Japanese share prices, but expectations of
aggressive monetary easing by the Bank of Japan kept the
five-year yield near its record low.
* Selling centred on the 20-year sector, ahead of the
auction of 1.2 trillion yen ($12.8 billion) 20-year JGBs on
* The 20-year yield rose 1.0 basis point to 1.750 percent
, though market players say it is a healthy
correction after the yield fell as much as six basis points
during the past seven sessions.
* Most market players expect the auction to be underpinned
by solid demand as investors look to tap the long end of the
yield curve with short-term bond yields near zero.
* The 10-year yield rose 0.5 basis point to 0.740 percent
, from a 3-1/2-week low of 0.730 percent hit on
* The five-year yield rose 0.5 basis point to 0.135 percent
, from a record low of 0.130 percent set on
Tuesday on expectations that the Bank of Japan will soon start
buying five-year bonds.
* The minutes of the Bank of Japan's policy meeting showed
on Tuesday a few members of the nine-member board considering
extending the duration of government bonds purchased to around
five years from the current limit of up to three years.
* With the BOJ under heavy pressure from Prime Minister
Shinzo Abe to take aggressive easing steps, many investors
expect the BOJ to soon include five-year bonds in its asset
*"It's almost seen as a done deal in the market," said Takeo
Okuhara, fund manager at Daiwa SB Investments. "And because
everyone now thinks the five-year yield will be almost fixed
(near zero), they are starting to feel it's safe to buy the
seven-year zone and even longer."
* Still, the rise in Japanese share prices hampered fund
inflows to JGBs for now. The Nikkei share average rose
0.9 percent to a 52-month high.