November 12, 2018 / 7:17 AM / 6 months ago

JGBs slightly firmer in subdued trade; 10-, 40-yr cash bonds untraded

TOKYO, Nov 12 (Reuters) - Japanese government bond (JGB) prices were slightly firmer on Monday, while the key 10-year and super-long 40-year cash bonds were untraded as activity was subdued, partly due to a U.S. market holiday.

The 10-year JGB futures rose 0.06 point to 150.75, supported by firmer U.S. Treasuries on Friday, although trading volume stood at 14,663 lots, the lowest level in three weeks.

Besides the U.S. holiday factor, the increasing dominance of the Bank of Japan (BOJ) in the market resulted in a shortage of tradable bonds, reducing trading flows between market players.

Trading in cash bonds was also subdued, with no trades in the benchmark 10-year and 40-year cash JGBs.

The 20-year and 30-year JGB yield fell half a basis point each to 0.655 percent and 0.880 percent, respectively.

“The market is looking to tomorrow’s auction as it is the first one that’s not followed by the BOJ’s buying the next day and is expected to see weaker demand,” said Katsutoshi Inadome, senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities. (Reporting by Tokyo Markets Team; Editing by Sunil Nair)

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