October 12, 2017 / 7:03 AM / a year ago

JGB curve flattens as market bets Abe on course to win election

TOKYO, Oct 12 (Reuters) - Long-dated Japanese government bonds gained on Thursday, flattening the yield curve, after Japanese media surveys showed Prime Minister Shinzo Abe’s ruling coalition is on course to win the upcoming general election.

His victory would make certain, investors think, that the Bank of Japan will stick to the current easy policy even after current BOJ Governor Haruhiko Kuroda’s term expires next year.

Projections by the Nikkei business daily, Yomiuri newspaper and Kyodo news agency showed Abe’s conservative Liberal Democratic Party-led coalition on track to win close to 300 or more seats in the 465-member lower house.

The 40-year JGB yield fell 1.0 basis point to 1.075 percent while the 30-year yield fell 0.5 basis point to 0.870 percent.

The shorter end of the curve was flat to slightly weaker as the BOJ’s bond buying in the 10-year tenor on Thursday produced a weak result, with selling orders hitting the highest level in the last four rounds of buying in that maturity.

The 10-year yield rose 0.5 basis point to 0.065 percent . The price of the 10-year JGB futures dipped 0.02 point to 150.38. (Reporting by Tokyo Markets Team; Editing by Sunil Nair)

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