April 26, 2013 / 2:15 AM / in 5 years

JGBs slip after robust U.S. jobs data, BOJ meeting outcome eyed

TOKYO, April 26 (Reuters) - Japanese government bond prices slipped on Friday, ahead of the outcome of the Bank of Japan meeting, after data showed a resilient U.S. labour market.

* The 10-year yield added 1 basis point to 0.590 percent, staying trapped within this week’s trading range of 0.575 to 0.610 percent. Ten-year futures dipped 0.06 point to 144.67.

* Volatility in the JGB market has eased lately after the BOJ announced on April 18 that it would increase the frequency of its government bond purchases to eight times a month from six currently as part of its sweeping stimulus measures unveiled earlier this month.

*The Bank of Japan will probably project on Friday that it will meet its 2 percent inflation target in two years due to its radical stimulus plan. The central bank is likely to hold off on offering any fresh policy initiatives at the meeting, with the markets’ focus on the BOJ’s economic forecasts to be released in its twice-yearly outlook report and how they compare with private-sector economists.

* The number of Americans filing new claims for unemployment benefits fell last week by a surprisingly large 16,000, a sign that there is still gas in the tank for the labour market’s recovery despite signs of slower growth.

* Superlong JGB sectors fared better, with the 20-year yield up 0.5 basis point to 1.485 percent and the 30-year yield unchanged at 1.610 percent.

* A fixed-income fund manager at a Japanese asset management firm in Tokyo said life insurance companies looked set to keep buying JGBs. The BOJ’s huge stimulus, expecting to buy 7.5 trillion yen of JGBs a month, was expected by many analysts to drive down yields and push Japanese investors to invest in overseas for higher returns, which will push the yen lower.

* “The 10-year Treasury yield is almost the same as the superlong sector in yen. If they take into account hedging costs and asset risk, it’s not a good investment,” he said.

“They have to invest in JGBs. They have no choice.”

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