May 12, 2014 / 3:25 AM / in 4 years

JGBs modestly weaker amid supply concerns

TOKYO, May 12 (IFR) - Japanese government bonds weakened slightly on Monday, pushing yields higher, with sentiment pressured by supply concerns.

The superlong zone weakened due to speculation that the Bank of Japan might reduce its bond purchases there under its massive asset-purchase programme, market sources said. Such concerns were heightened by a report in a domestic fax service.

As there are duration-heavy auctions this month, successful bidders are seen as likely selling the new issues to the Bank of Japan, so that the central bank could reduce its superlong purchases if the average remaining maturity of its JGB purchases exceeds 7 years.

The yield on the 20-year JGB rose the most, adding 2 basis points to 1.485 percent. The 30-year yield rose 1 basis point to 1.710 percent, while the 10-year yield also added 1 basis point to 0.610 percent. The 5-year yield rose by 0.5 basis point.

Ten-year lead June JGB futures moved in an extremely narrow 145.03-145.10 range before finishing at midday down 0.06 point at 145.07.

The JGB market had a muted reaction to data released on Monday that showed a much lower-than-expected current account surplus in March on weak demand for exports and rising imports.

Reporting by Takahiro Okamoto; Editing by Jacqueline Wong

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