TOKYO, Nov 14 (IFR) - Japanese government bond prices were
mostly up at midday on Thursday, ahead of the outcome of an
auction of 5-year notes later in the session.
The 7-year/30-year yield curve steepened by 2 basis points
from Wednesday. A relatively sharp fall in U.S. Treasury yields
on Wednesday from their 2-month highs had some positive impact
on prices of 5-year to 10-year JGBs, despite firmer Tokyo
In the morning session, several regional banks bought the
current 5-year JGB (issue #115 with a coupon of 0.2 percent,
maturing in Sept 2018) at 0.1975 percent ahead of the results of
the 5-year auction.
As widely expected, the Ministry of Finance set the coupon
of the new 5-year JGBs at 0.2 percent, unchanged from the
previous month, re-opening the current issue.
JGB market participants widely expect the 5-year JGB auction
to go smoothly, as regional banks and pension funds seem eager
to buy the new 5-year notes at current levels on expectations
that the Bank of Japan will continue to buy in the 5-year to
10-year zone under its massive JGB purchase program for at least
a few years.
Big domestic life insurers and Japanese megabanks were
largely sidelined in the morning session, traders said. One
corporate pension fund manager told IFR this morning that a
majority of Japanese financial institutions hope that JGB yields
will rise gradually, with the curve steepening similar to the
Treasury yield curve.
At midday, the yield on the current 5-year note
was down 0.5 basis point from Wednesday at 0.20
percent, while the 10-year yield also fell 0.5
basis point to 0.595 percent.
In the superlong zone, the 20-year yield lost
0.5 basis point to 1.475 percent, ahead of next Tuesday's
monthly offering of 20-year JGBs. The 30-year yield
rose 0.5 basis point to 1.625 percent.
Lead December JGB futures moved in a 145.00-145.09
range before finishing the morning session up 0.19 point at
The JGB market shrugged off data released early on Thursday
that showed Japan's economy slowed less than expected in the
July-September period and is expected to pick up pace in the
current quarter as consumers spend now to beat a tax rise next
year, although business investment came in sharply below market