TOKYO, Oct 4 (Reuters) - Japanese Government Bond prices pared most losses on Tuesday after the auction of a 2.4 trillion yen ($23.5 billion) 10-year JGBs drew solid demand.
The 10-year yield rose to as high as minus 0.055 percent before the auction but slipped to minus 0.070 percent, up just 0.5 basis point on the day.
The first 10-year JGB auction after the BOJ last month set a target for their yield of zero percent drew bids 3.82 times the offer, slightly higher than 3.74 times in the previous auction.
The tail, or the gap between the lowest and average price, was 0.02, unchanged from the last month’s auction.
Many investors are also selling put options of 10-year cash bonds around a yield of zero percent, said an option trader at a Japanese brokerage, as they are ready to buy the bonds around that level.
The benchmark 10-year JGB futures also pared losses to trade at 152.08, down 0.08 point on the day, after having fallen to 151.97 earlier in the day
The yield curve flattened slightly amid a view that investors will eventually buy long-dated bonds that still have positive yields, rather than negative-yielding short paper.
The 30-year yield rose 0.5 basis point to 0.455 percent while the five-year yield rose 1.5 basis point to minus 0.220 percent.
The two-year yield rose 1.0 basis point to minus 0.270 percent.
$1 = 102.12 yen Reporting by Hideyuki Sano; Editing by Kim Coghill