March 7, 2017 / 7:14 AM / 9 months ago

Benchmark JGBs firm, superlong zone slips after 30-year sale

TOKYO, March 7 (Reuters) - Benchmark Japanese government bonds firmed slightly on Tuesday, though superlong maturities slumped after an uninspiring 30-year JGB sale.

The benchmark 10-year JGB yield fell 0.5 basis point (bp) to 0.065 percent, while 10-year JGB futures ended up 0.11 point at 150.70.

But the 20-year yield rose 1 bp to 0.650 percent.

The 30-year JGB yield added 2 bps to 0.855 percent, up from an earlier session low of 0.825 percent.

At the Ministry of Finance’s sale of 800 billion yen ($7.02 billion) of 30-year JGBs with a 0.8 percent coupon, 97.5395 percent of the bids were accepted at the lowest price of 99.30, which was somewhat lower than some market participants had expected.

The tail between the average and lowest accepted prices narrowed to 0.19 compared with that of last month’s offering at 0.27. But the sale drew bids of 3.14 times the amount offered, down from the previous sale’s bid-to-cover ratio of 3.23 times, indicating somewhat weaker demand for the bonds.

With inflation still stagnant and economic recovery fragile, Bank of Japan Governor Haruhiko Kuroda has no plan to tighten monetary policy any time soon.

But he wants to ensure the BOJ’s stimulus programme is made sustainable by laying the grounds for a gradual slowdown in its bond purchases, sources familiar with the BOJ’s thinking say -- with just months before the departure of two key board members who want to slow an unsustainable pace of bond purchases.

$1 = 113.9400 yen Reporting by Tokyo markets team; Editing by Gopakumar Warrier

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