Wednesday, 27 June 2012 10:13
TOKYO; Japanese government bonds rose on Wednesday, getting a safe-haven lift in the waning days of the April-June quarter from ongoing fears about Europe's debt woes ahead of a meeting of regional leaders.
Investors remained sceptical that a two-day summit of European Union leaders beginning on Thursday would result in any solid progress towards resolving that region's debt crisis.
JGB investors have only a few days left to make quarter-end adjustments to their portfolios.
Some strategists expect the superlong tenor to benefit from month-end buying by pension funds to extend the duration of their portfolios, but others expect them to hold off and wait for better yield levels.
"We're still waiting to see if the unexpected happens at the EU side," said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.
"Pension funds have plenty of money to put to work, but I'm not too sure you'll see much happen on the domestic side because it is June-end, and you'd expect more in September-end because that's the semiannual year-end," he added.
Investors also kept an eye on domestic politics, although Tuesday's passage of a tax-hike bill in parliament's lower house had no immediate market impact.
Japanese Prime Minister Yoshihiko Noda faces a split in his party that could trigger a snap election.
The 10-year JGB futures contract for September was up 0.04 point at 143.84 by midday.
The 10-year JGB yield slipped 1.5 basis points to 0.805 percent, inching back towards a nine-year low of 0.790 percent hit on June 4.
The superlong sector slightly lagged, with the 20-year yield losing half a basis point to 1.655 percent and the 30-year yield flat at 1.880 percent.
The five-year yield was flat at 0.210 percent.
Copyright Reuters, 2012