September 5, 2018 / 7:04 AM / 8 months ago

JGBs tick up on strong auction, trade worries

TOKYO, Sept 5 (Reuters) - Japanese government bonds ticked up on Wednesday following strong 10-year bond auction results, while heightened concerns about global trade friction stoked demand for safe-haven debt.

Ten-year JGB futures rose 0.05 point to 150.32, while the yield on the benchmark cash 10-year JGBs fell 0.5 basis point to 0.110 percent.

An auction of 2.2 trillion yen 10-year JGBs on Wednesday drew solid demand, with bid-to-cover rising to 4.55 from 4.17 in the previous auction. The tail, or the gap between the lowest and average prices, shrunk to 0.01 from 0.12.

The results helped to offset worries that the Bank of Japan could reduce the total amount of its bond buying this month after it made tweaks to its monthly bond buying plan.

The BOJ is due to buy JGBs with more than five to 10 years to maturity on Thursday, and many market players now expect it to buy 450 billion yen ($4.04 billion), a pace that would lead to a monthly total of 2.25 trillion yen.

That would be below 2.4 trillion yen it bought in August.

The 20-year JGB yield fell 1 basis point to 0.615 percent and the 30-year JGB yield dropped 1 basis point to 0.845 percent.

The market was propped up by caution on global trade frictions.

$1 = 111.44 yen Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips

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