TOKYO, Sept 29 Japanese government bonds mostly
slipped on Thursday, as equities rallied and demand at a
two-year auction was modestly weaker than last month's sale of
The benchmark 10-year JGB yield added 1 basis point (bp) to
minus 0.085 percent, while December 10-year
futures ended down 0.05 point at 152.31.
Some bargain-hunting emerged in superlong maturities, with
the 30-year yield shedding 2 bps to 0.435 percent
in afternoon trading, while the 40-year yield fell 2.5 bps to
The two-year JGB yield added 0.5 bp to minus 0.295 percent
The Ministry of Finance's sale of 2.3 trillion yen ($22.62
billion) of 2-year JGBs with a 0.1 percent coupon produced a
highest yield of minus 0.254 percent, with around 52 percent of
the bids accepted at the lowest price of 100.710.
The sale drew bids of 3.78 times the amount offered, down
from the previous sale's bid-to-cover ratio of 4.44 times.
The tail between the average and lowest accepted prices
widened to 0.018, compared with that of last month's offering at
0.004, indicating slightly weaker demand for the bonds.
On Friday, the Bank of Japan will conduct its third buying
operations under the central bank's new monetary policy
framework announced last week. The first two operations
following the policy shift proceeded smoothly, with no
significant changes from past moves.
Investors are still trying to determine how much fluctuation
the BOJ would like to see around its zero percent target for the
10-year JGB yield, and how it will adjust its operations to meet
"The BOJ is sensitive to the fact that any reductions might
be interpreted as tapering, so it will likely continue to be
very careful with its operations," said a fixed-income fund
manager at a Tokyo asset management firm.
Also on Friday, the central bank will announce its bond
buying operation plan for October, which could contain clues to
the extent the BOJ would like to see the yield curve steepen.
($1 = 101.6900 yen)
(Reporting by Tokyo markets team; Editing by Shri Navaratnam)