TOKYO: Japanese government bond futures inched down on Thursday after US Treasuries dropped and on hedge selling ahead of an auction, but any downside was limited on the view that the five-year sale was expected to draw reasonable demand.
* Players were seen making room heading for the 2.4 trillion yen ($29.3 bln) five year offering on Thursday. The five year yield was up 1.0 basis point to 0.445 percent , moving away from a four-month low of 0.410 percent hit earlier this month. But traders said other maturities were unexpectedly firm.
* June JGB futures were down 0.05 point at 140.59, pulling back from a two-month peak of 140.97 marked on Monday. The benchmark 10-year yield was unchanged at 1.150 percent .
* The Bank of Japan is expected to hold fire at a two day policy meeting that finishes on Friday. For more, see But yields were pushed lower until recently amid expectations of economic slowdown and prospects that the Bank of Japan may take additional steps to help the economy in the future.
* The Ministry of Finance reopened the 0.5 percent coupon No.96 5-year JGB for today's auction of the maturity. Analysts said the sector looked neither particularly cheap nor expensive on the yield curve.
* "The sale will be supported as the maturity looks less volatile than others. I expect that buying will remain solid on dips, as recent data showed the loan deposit gap kept rising even after the March 11 earthquake and tsunami," said Takafumi Yamawaki, chief rates strategist at JPMorgan. Japanese banks are the main players for intermediate maturities including five year JGBs. The MOF releases the auction results at 0345 GMT.
* Foreign investor buying of Japanese bonds accelerated in the latest week, when they bought a net 1.266 trillion yen ($15.6 bln) of the debt. The three week moving average comes in at 941.7 billion yen, the highest since August 2007, likely helping to drive 10 year JGB yields down near five-month lows.
* US Treasuries prices fell on Wednesday as investors took profits from a rally that had pushed yields to the lowest since December and bought riskier assets like stocks and commodities instead.
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