JGBs steady to touch higher following gains in Treasuries

TOKYO: Japanese government bond prices were steady to slightly higher on Thursday, with the market drawing mild support from overnight gains in U.S. Treasuries and sagging Tokyo shares.

The five-year and 10-year JGB yields were flat at minus 0.065 percent and 0.070 percent, respectively, while the 30-year yield dipped 0.5 basis point to 0.870 percent.

The JGB market took in stride Japan's cabinet reshuffle on Thursday.

Japanese Prime Minister Shinzo Abe opted for safe hands over new faces, when choosing his new cabinet, with some key members such as Finance Minister Taro Aso retaining their posts.

The financial markets may not have reacted immediately to the new line-up, analysts said, but will be waiting to see how the changes affect the prime minister's flagging ratings in the longer run.

Thursday's 400 billion yen ($3.61 billion) 10-year inflation-linked JGB auction attracted firm investor demand amid speculation by some market participants that Japan's nationwide core consumer price index (CPI) could rise and temporarily approach 1 percent later this year.

The bid-to-cover ratio, a gauge of demand, at the auction was 3.19, compared to 3.00, the average from the past four auctions. The finance ministry auctions the 10-year inflation-linked JGBs every two months.

Long-dated Treasury prices rose on Wednesday after the U.S. Treasury Department said it was still considering an ultra long bond, but didn't announce a new issue.