TOKYO Aug 15 Yields on benchmark Japanese
government debt fell to near a three-month low on Thursday,
though superlong maturities underperformed as some market
players put on steepening trades ahead of a 40-year bond sale
* The 20-year yield added 0.5 basis point to
1.665 percent, while the 30-year yield was also
up 0.5 basis point at 1.780 percent.
* In contrast, the 10-year yield slipped 1
basis point to 0.740 percent, just shy of a three-month low of
0.730 percent touched on Tuesday. The five-year yield
dipped 0.5 basis point to 0.275 percent.
* "It seems that someone is starting to buy short-end, or
the 10-year sector, and selling the long-end of the curve as
part of the steepening trade," said Tadashi Matsukawa, head of
Japan fixed income at PineBridge Investments.
"Ahead of the 40-year auction, I think that makes sense. The
BOJ purchased (JGBs) on Monday and Wednesday. They came in twice
... The next time they will come in is probably after the
40-year auction," he said, adding that those investors were
likely to keep on their steepening trades until after the debt
* The Ministry of Finance is to sell 400 billion yen ($4.1
billion) worth of 40-year bonds on Tuesday.
* Ten-year JGB futures rose 0.13 point to 144.07,
exceeding their five-day moving average of 144.04 and not too
far from a three-month peak of 144.24 hit on Tuesday.
* The 10-/30-year spread stood at 104 basis points, off a
two-week low of 102 basis points reached on Tuesday, while the
spread between 10- and 20-year yield was at 92.5 basis points,
also up from a two-week trough hit on Aug. 13.