TOKYO, Oct 29 (Reuters) - Japanese government bonds eased on Monday after the previous session’s rise and ahead of Tuesday’s Bank of Japan meeting, with the market expecting the central bank to ease monetary policy further.
* The 10-year yield inched 0.5 basis point higher to 0.765 percent, while the 10-year JGB futures eased one tick to 144.23, holding above their 20-day moving average at 144.16.
* The five-year yield was unchanged at 0.185 percent, supported by expectations that the BOJ would increase the size of its asset buying programme on Tuesday.
The central bank now buys bonds with up to three years left to maturity in its asset purchase programme, hence supporting shorter-date notes.
* “The U.S. Treasury market rose sharply last Friday. Still, the JGB market is still rangebound. Basically market participants are waiting for the BOJ decision tomorrow and the nonfarm payrolls this Friday,” said Tomohisa Fujiki, interest rate strategist at BNP Paribas.
* Finance Minister Koriki Jojima said on Monday that he wants to the BOJ to take bold policy steps while closely working with government to beat deflation, piling pressure on the central bank to act on the eve of the its rate review.
* A weekly gauge of sentiment in the Japanese government bond market turned lower but remained in positive territory for a second straight week, with most respondents expecting benchmark yields to stay in their recent range, a Thomson Reuters survey showed on Monday.
* Yields on the 30-year bonds rose 1.5 basis points to 1.945 percent, giving up Friday’s fall, while those on the 20-year debt put on 1 basis point to 1.680 percent.
* Primary dealers in Japanese government bonds warned the finance ministry on Friday of the growing risk of a ratings downgrade over a political standoff that could cause the government to run out of money next month.
Japan is seven months into the current fiscal year, but legislation needed to sell bonds to fund this fiscal year’s budget is stuck in limbo due to political bickering.
* “Most of the market participants think the special deficit bill will be passed by the Diet. The current issuance programme will go on. This is still the central scenario in the market, not affecting the market today,” Fujiki said.