June 27, 2017 / 6:26 AM / 6 months ago

JGBs mostly firm after strong demand at 2-year sale

TOKYO, June 27 (Reuters) - Japanese government bonds mostly firmed on Tuesday, bolstered by strong demand at an auction of two-year notes.

The 10-year cash JGB yield fell half a basis point to 0.045 percent, while the September 10-year JGB futures contract finished up 0.13 point at its session high of 150.62.

The Ministry of Finance’s sale of 2.2 trillion yen ($19.69 billion) of two-year JGBs with a 0.10 percent coupon produced a lowest price of 100.4050, with some 67.1989 percent of the bids accepted at that price.

The sale drew bids of 6.79 times the amount offered, even higher than the previous sale’s robust bid-to-cover ratio of 5.06 times. The tail between the average and lowest accepted prices narrowed to 0.001, compared with that of last month’s offering at 0.006, indicating even stronger demand for the bonds.

The two-year JGB yield shed 1.5 basis points to minus 0.120 percent.

But the superlong zone was treading water, with the 20-year JGB yield flat at 0.560 percent, while the 30-year JGB yield was unchanged on the day at 0.805 percent. ($1 = 111.7600 yen) (Reporting by Tokyo markets team; Editing by Eric Meijer)

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