September 4, 2018 / 7:22 AM / a year ago

JGBs steady after BOJ operation points to small cut in 3-5yr bond purchase

TOKYO, Sept 4 (Reuters) - Japanese government bond prices were little changed on Tuesday as a Bank of Japan operation pointed to a small cut in its monthly buying of bonds with more than three to five years to maturity and overall thin trading.

The BOJ offered to buy 350 billion yen ($3.15 billion) of three- to five-year JGBs, an amount that could lead to a small reduction in its monthly buying in those maturities.

But the market largely shrugged off that move as traders had already anticipated it and also as the reduction was relatively small in light of the BOJ’s overall bond buying scheme.

Ten-year JGB futures were nearly flat, falling 0.02 point to 150.27.

The benchmark 10-year cash JGB yield was steady at 0.115 percent, its highest in a month.

The 20-year yield fell half a basis point to 0.620 percent.

The 30-year JGB yield climbed half a basis point to 0.855 percent.

The two-year and five-year JGB yields were unchanged, at minus 0.110 and minus 0.070 percent, respectively.

Many market players saw the BOJ’s move to cut monthly buying of bonds with more than three to five years to maturity as another small step in the BOJ’s gradual tapering of its bond buying.

Market players were keenly looking to the BOJ’s first operation in September after the central bank announced small tweaks to its monthly bond purchase for this month on Friday, reducing the frequency of its buying in one to three, three to five and five to ten-year JGBs to five times from six times previously.

They now look to the BOJ’s buying of five- to ten-year JGBs on Thursday, the frequency of which the central bank has also reduced to five times from six time

$1 = 111.12 yen Reporting by Tokyo Markets Team; Editing by Sunil Nair

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