December 21, 2018 / 7:28 AM / 5 months ago

JGBs ease slightly; liquidity-enhancing auction draws demand

TOKYO, Dec 21 (Reuters) - Japanese government bond (JGB) prices eased on Friday as investors re-established positions after the previous session’s steep rally, while a liquidity-enhancing auction attracted reasonably strong investor demand.

The benchmark 10-year JGB yield rose 1.5 basis points to 0.040 percent, while 10-year March JGB futures lost 0.21 points to 152.30, with a trading volume of 33,289 lots.

The super-long zone followed suit, with the 20-year yield and the 30-year yield each gaining 2.5 basis point, to 0.540 percent and 0.745 percent, respectively.

The finance ministry on Friday offered to sell 600 billion yen ($5.39 billion) of off-the-run JGBs with remaining maturities of 5 years to 15.5 years. The ministry regularly conducts such sales in an attempt to provide the market with liquidity.

The auction bid-to-cover ratio, which gives an indication of demand, came in at 3.12, above a bid-to-cover ratio of 2.58 from the previous auction.

On Thursday, U.S. Treasury yields fell to more than eight-month lows, and the yield curve flattened, as investors evaluated the Federal Reserve’s moves to tighten monetary policy.

$1 = 111.2500 yen Reporting by Tokyo Markets team; Editing by Rashmi Aich

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