TOKYO, July 11 (IFR) - Japanese government bonds were steady
in quiet trading on Friday, supported by the Bank of Japan's
In the morning session, cash activity was limited to
transactions among dealers ahead of the weekend. The JGB market
largely shrugged off fears about financial woes at the
family-owned holding companies behind Portugal's largest-listed
bank, which roiled European markets on Thursday.
Finance Minister Taro Aso said earlier on Friday that
Japan's long-term interest rates are abnormally low, with the
benchmark 10-year bond yield now trading at a 15-month low,
reflecting global low interest rates.
Yields on the 7-year to 8-year JGBs dropped further by 0.5
basis point, pushing JGB futures higher toward their record
intraday high of 146.41 set on April 5 last year.
In the superlong zone, the current 30-year
and 40-year JGBs softened, with respective yields rising 1 basis
point to 1.725 percent and 1.840 percent.
The BOJ offered to buy 300 billion yen ($2.96 billion) of
JGBs in the 1-year to 3-year zone, 200 billion yen in the 3-year
to 5-year zone, 100 billion yen in the 10-year to 25-year zone,
and 30 billion yen of JGBs maturing in more than 25 years. The
BOJ bought JGBs of the same tenors and in the same amounts on
June 27 and July 7.
The yields on the current 2-year, 5-year
, 10-year, and 20-year
JGBs were all unchanged from Thursday at 0.060
percent, 0.145 percent, 0.540 percent and 1.420 percent,
Ten-year lead September JGB futures moved in a
narrow 145.86 to 145.92 range and ended morning trading up 0.06
point at 145.91.
BOJ INCREASES T-BILL PURCHASES
The BOJ increased the size of a Japanese government discount
bill-buying operation to 3 trillion yen, seeking 6-month bills
to achieve its year-end monetary base target.
As the finance ministry is scheduled to auction 1-year bills
next week, which will also help the BOJ to achieve the monetary
base target, the central bank will likely buy another 3 trillion
yen of bills again next week, some market participants said.
The focus is on whether the BOJ would accept bids if
participants try to sell bills over par, they said.
In reaction to the BOJ's operations, the benchmark
three-month yield firmed to 0.02 percent from
Thursday's close of 0.026 percent.
A week ago, the yield on three-month bills fell to zero
percent for the first time since late 2005, on fears that
short-term bills could disappear from markets as the Bank of
Japan vacuums them up to facilitate its asset purchases.
($1 = 101.3200 Japanese yen)
(Reporting by Masatsugu Hisatsune and Takahiro Okamoto; Editing
by Jacqueline Wong)