TOKYO: Japanese government bond prices were mostly lower on Tuesday ahead of a sale of five-year notes that is expected to see demand as it marks the first new issue for the maturity in three months. * But moves were slight as investors awaited events later in the week.
Germany's constitutional court will rule on the euro zone's bailout fund on Wednesday and the US Federal Reserve will conclude a two-day meeting on Thursday, with more investors expecting further bond-buying after last week's disappointing US jobs data.
The Ministry of Finance is offering 2.5 trillion yen of new five-year JGBs with a coupon of 0.20 percent.
"Although the series does not look particularly attractive on the curve, we believe we can look for demand as investors roll over portfolio holdings, given that September is a redemption month and that this will be a new series," Bank of America Merrill Lynch strategists wrote in an auction preview.
Strategists at Barclays noted recent auction levels have tended to be expensive relative to intraday market movements, particularly in the case of new issues.
Last month's auction met firm demand, with the tail between the average and lowest accepted prices coming in at zero, matching that of two sales before it.
The August sale had a bid-to-cover ratio of 3.28, down from the previous sale's 4.44 and slightly below the average for the past year of 3.48.
The 10-year JGB futures contract for December ended morning trade up 0.02 point at 143.94, getting a lift from waning risk appetite as equities sagged.
In the cash bond market, the 10-year bond yield added half a basis point to 0.800 percent.
The yield on the current five-year note also rose half a basis point to 0.195 percent.
In the superlong sector, the 30-year bond yield added half a basis point to 1.885 percent, while the 20-year bond underperformed, its yield rising 1 basis point to 1.655 percent.
The Ministry of Finance will auction 20-year bonds on Thursday.
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