TOKYO: Japanese government bond prices slipped on Wednesday, as appetite for safe-haven assets waned ahead of a German court's expected approval of the euro zone's bailout fund, with the superlong sector also pressured ahead of a 20-year sale.
The US Federal Reserve will begin its two-day meeting later in the day, with some investors anticipating an announcement of more bond purchases to stimulate the economy. The possibility of more easing lifted equities, and dampened demand for fixed income assets, though caution limited moves.
Germany's constitutional court will rule on the euro zone's bailout fund on Wednesday. Legal experts polled by Reuters unanimously expected the top court to approve the fund and budget rules, while imposing tough conditions on future rescues.
"The main focus is Germany today, and then there's the Fed meeting tomorrow, too. There is some buying on dips, but mostly, JGB investors are on hold, watching external factors," said a fixed-income fund manager at a European asset management firm in Tokyo.
The 10-year JGB futures contract for December ended morning trade down 0.10 point at 143.84. In the cash bond market, the 10-year bond yield added 1 basis point to 0.805 percent.
The yield on the five-year note rose half a basis point to 0.210 percent after Tuesday's sale in that sector met firm demand as expected.
The Ministry of Finance will auction 20-year bonds on Thursday, which has added supply pressure to the long end of the yield curve and led the curve to steepen slightly.
The 20-year bond yield rose 1 basis point to 1.655 percent, while the 30-year bond yield also added 1 basis point to 1.885 percent.
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