TOKYO: Most JGB prices slipped on Thursday on profit-taking after the 10-year yield neared a historical low, but the longest maturities advanced on concerns about the euro zone's debt crisis.
The 10-year bond yield rose 1.0 basis point to 0.835 percent from a 19-month low of 0.825 percent hit on Wednesday. The benchmark 10-year JGB futures price fell 0.09 point to 143.40.
Many market players still think the 10-year yield is likely to fall below its Oct 2010 low of 0.820 percent soon, given huge uncertainty over how policy makers will manage Greece's debt crisis after a fresh election set for June 17.
"Things will be unstable at least until the election. Some market types may think that voters will behave rationally because Greece will be worse off without the bailout money, but if political parties call for renegotiation (with international creditors), the public will support it," said a fund manager at a Japanese insurance company.
Against this backdrop, the longest maturities continued their bull run, with the 30-year bond yield falling 1.5 basis points to 1.755 percent, a 19-month low.
The 20-year yield fell 1.0 basis point to 1.595 percent , also a 19-month low.
Superlongs - maturities with over 10 years - looked attractive because their yield levels are still considerably above historical lows, market players said.
The 30-year yield is still more than 20 basis points above its August 2010 low of 1.535 percent while the 20-year bond yield hovered about 8 basis points above its low hit in the same month.
In contrast, the five-year yield stood just 3.5 basis points above its 2010 low of 0.20 percent even after it rose 0.5 basis point Thursday morning to 0.235 percent.
The longest maturities also benefited from a solid 40-year bond auction on Tuesday as well as strong receiving in the interest rate swap market. The 20-year swap rate fell to a three-year low around 1.51/54 percent.
The Ministry of Finance offered 2.5 trillion yen of five-year bonds with coupon of 0.2 percent, matching its record low coupon set only on two issues in 2003.
Market players expect decent demand given the strong tailwind from the European debt crisis. The auction results will be announced at 12:45 p.m. (0345 GMT).
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