TOKYO, April 28 Japanese government bonds firmed
on Friday after a two-year auction met strong demand, as
investors awaited details of the Bank of Japan's regular
bond-purchasing operations for next month.
The benchmark 10-year JGB yield was steady at 0.015 percent
, while 10-year JGB futures ended up 0.04
point at 151.02.
At the Ministry of Finance's sale of 2.2 trillion yen
($19.79 billion) of two-year JGBs with a 0.10 percent coupon,
some 97.2833 percent of the bids were accepted at the lowest
price of 100.585.
The sale drew bids of 5.51 times the amount offered,
significantly above the previous sale's bid-to-cover ratio of
3.82 times, indicating stronger demand for the bonds.
The two-year JGB yield was down 1.5 basis
points at minus 0.210 percent, while the five-year yield
shed 1 basis point to minus 0.160 percent.
In the superlong zone, the 20-year JGB yield shed 1.5 basis
points to 0.555 percent, while the 30-year JGB
yield also fell 1.5 basis points to 0.780 percent.
The BOJ will release details of its planned purchases in May
later on Friday at 0800 GMT. In April, the central bank trimmed
the amount of shorter-dated JGBs it bought compared to March.
The BOJ's massive asset purchase programme has reduced
market liquidity. In an attempt to reduce volatility, the
central bank has been tweaking its bond-buying.
However, BOJ officials say they no longer place as much
importance on the guidance as before, or on when to remove or
change their language, because the recent slowdown in the
central bank's bond buying has not disrupted markets.
While some officials see no problem removing the language,
others fret of the risk that markets could interpret such a move
as signalling a full-scale tapering of the BOJ's asset
BOJ Governor Haruhiko Kuroda has remained non-committal,
repeating only that the bank's main policy target was now
interest rates, not the pace of bond buying.
He has also stressed that the BOJ can now achieve its
interest rate targets with less bond buying than before, given
its increasing dominance in the bond market.
"Since we adopted our yield curve control, the actual amount
of bond buying has fluctuated from time to time. Sometimes the
pace is above or below the guidance ... But I don't think we are
facing any problems achieving our yield targets while having the
80-trillion-yen guidance in place," Kuroda told a news
conference on Thursday after the BOJ's regular policy meeting,
when asked about the guidance.
On Thursday, the BOJ kept monetary policy unchanged as
expected, but offered its most optimistic assessment of the
economy in nine years, signalling its confidence that a pick-up
in overseas demand will help sustain an export-driven recovery.
Japanese economic data released early in the session showed
Japan's core consumer prices rose at a slower than expected pace
in March from a year earlier, but they posted their third
straight month of increase, driven by rising energy costs.
($1 = 111.1600 yen)
(Reporting by Tokyo markets team; Additional reporting by Leika
Kihara; Editing by Simon Cameron-Moore)