August 18, 2014 / 3:41 AM / 3 years ago

JGBs edge higher, bolstered by U.S. Treasuries rally

TOKYO, Aug 18 (IFR) - Japanese government bonds were slightly firmer on Monday, riding on last week’s rally in U.S. Treasuries, with the benchmark yield edging down to match Friday’s 16-month low.

Rising tensions between Russia and Ukraine on Friday sent the yield on benchmark 10-year U.S. Treasury notes to a session low of 2.30 percent, its lowest since June 2013. Bond yields move inversely to prices.

JGB investors were cautious ahead of Tuesday’s monthly 1.2 trillion yen ($11.73 billion) 20-year JGB auction, which will re-open the current issue number 149.

Activity was thin on Monday, with trading volumes of the current 10- and 20-year JGBs on JBT, the largest interdealer broker, totalling only 15.5 billion yen and 6 billion yen, respectively, in the morning session.

Contrary to market expectations, the Bank of Japan did not offer to buy any JGBs on Monday under its massive asset-purchase programme.

The yield on the current 10-year JGBs fell 0.5 basis point to 0.495 percent, while the current 20-year yield slipped 1 basis point to 1.350 percent, its lowest level since mid-July.

In the longer-dated zone, the 30-year yield was down 0.5 basis point to 1.660 percent, while the 40-year yield was flat at 1.795 percent.

Lead September JGB futures moved in an extremely narrow 146.20-146.24 range in the morning session before finishing at midday up 0.07 point at 146.23. (1 US dollar = 102.2700 Japanese yen) (Reporting by Masatsugu Hisatsune; Editing by Sunil Nair)

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