TOKYO Aug 20 Japanese government bonds inched
lower on Tuesday in thin trading, as investors adjusted their
portfolios ahead of this session's sale of 40-year debt.
* The Ministry of Finance offered 400 billion yen ($4.08
billion) of 40-year bonds, reopening the current issue with a
1.9 percent coupon.
* The Bank of Japan held a very high 44 percent of the
outstanding issuance of the current 40-year issue as of
end-July, and "current monetary policy makes it difficult to
value the 40-year JGB," strategists at Bank of America Merrill
Lynch said in a note to clients.
"Because traders have not built up short positions and the
atmosphere is not favourable for holding inventory, we think
bids could be limited" at the auction, they said.
* The yield on the benchmark 10-year JGB rose
one basis point to 0.770 percent, pulling away from a
three-month low of 0.730 percent hit last week.
* Ten-year JGB futures ended morning trade flat at
143.73, after spending the morning session in a narrow range
between 143.64 and 143.76.
* Although JGBs have mostly focused on domestic supply and
demand factors, a continuing sell-off in U.S. Treasuries has
discouraged JGB buyers.
The yield on the benchmark 10-year Treasury notes
rose as high as 2.90 percent on Monday. That was its
highest since July 2011, and up sharply from 1.60 percent in
early May, before the U.S. Federal Reserve started signalling
its intentions to pare back its quantitative easing if the
economy continued to strengthen.