July 2, 2014 / 3:00 AM / in 3 years

Benchmark JGBs edge down ahead of 10-year auction

TOKYO, July 2 (IFR) - Benchmark Japanese government bond prices slipped slightly on Wednesday ahead of Thursday’s 10-year sale, while prices were steady in the superlong zone.

JGBs opened softer on the back of weaker U.S. Treasuries and higher stocks overnight, but 20-year to 30-year JGBs recovered most of their earlier losses. A few regional banks sold 10-year JGBs maturing in around 6 years, while other investors bought the current 10-year JGBs on dips at 0.56 percent, ahead of Thursday’s monthly 2.4 trillion yen ($23.62 billion) 10-year JGB auction.

The Bank of Japan did not offer to buy JGBs under its massive asset-buying scheme on Wednesday. The 10-year JGB extended losses after the central bank refrained from entering the market, with its yield adding 1 basis point to 0.560 percent.

Market participants expect the central bank to buy JGBs on Friday, a day after the 10-year sale, as it typically refrains from buying on days that the Ministry of Finance conducts auctions.

The yield on the current 5-year JGBs added 0.5 basis point to 0.165 percent.

In the superlong zone, the 20-year yield was flat at 1.420 percent, compared with 1.430 percent earlier, while the 30-year yield was also flat at 1.670 percent, compared with 1.675 percent earlier.

Ten-year lead September JGB futures moved in a narrow range of 145.61 to 145.67 and ended the morning session down 0.04 point at 145.66. ($1 = 101.6100 Japanese Yen) (Reporting by Masatsugu Hisatsune; Editing by Richard Borsuk)

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