TOKYO, July 25 Yields on Japanese government
bonds edged higher on Thursday, with the benchmark 10-year yield
moving away from a two-month intraday low matched in the
previous session as the market tracked weaker U.S. debt prices
and positioned for a 20-year auction.
* The Ministry of Finance offered 1.2 trillion yen ($11.98
billion) of 20-year bonds, reopening the current issue with a
coupon of 1.7 percent. Auction results will be out shortly.
Last month, the ministry announced that the July and August
20-year sales would both reopen the June issue. It said that any
changes to the plan warranted by market conditions would be
announced a week prior to the sale.
* "Although we currently think demand is unlikely to be
strong enough to push 20-year JGB yields lower, in addition to
relative value considerations, we think carry and rolldown makes
it interesting to hold the 20-year JGB within a
10-year/20-year/30-year butterfly position," strategists at Bank
of America Merrill Lynch wrote in a note to clients.
They added that it was worthwhile to consider holding the
position over the short term, given the statistical likelihood
of it outperforming after the auction.
* The 10-year yield added 1.5 basis points to
0.785 percent, moving away from 0.770 percent touched in the
previous two sessions, which was its lowest since May 14.
* The 10-year JGB futures contract ended morning
trade down 0.16 point at 143.63, retreating from a two-month
intraday high of 143.85 hit on Tuesday.
* The 20-year yield added 1 basis point to
1.725 percent, while the 30-year yield also
tacked on 1 basis point to 1.860 percent.
* On Wednesday, U.S. Treasuries prices were pressured after
a sale of $35 billion in new five-year notes met low demand.
* Capital flow data for last week from the Ministry of
Finance showed Japanese investors were net buyers of foreign
bonds for a third straight week, after purchasing the largest
amount since September 2012 in the previous period.