TOKYO: A gauge of sentiment in the Japanese government bond market has turned negative, with some investors citing supply/demand factors ahead of a 10-year sale this week, a weekly Thomson Reuters survey showed on Monday.
The month-end duration extension buying that supported the market last week has finished as both a new month and fresh quarter begin.
The Ministry of Finance will conduct an auction of 10-year bonds on Thursday. If yields hold at current levels, market participants said the coupon would be set below the 0.8 percent seen in the past three sales of the maturity.
The weekly poll's JGB bull-bear diffusion index, calculated by subtracting the number of bearish market players from those that are bullish, came in at minus 17, deteriorating from plus 2 in last week's survey.
The JGB survey found that 48.3 percent of respondents foresee JGB yields rising this week, up from 16.7 percent in the previous poll.
The percentage of respondents expecting lower rates also rose to 31.0 percent from 19.0 in last week's poll, while 20.7 percent of total respondents expect JGB yields to trade sideways, down from 64.3 percent in the survey before.
The median forecast for the 10-year JGB yield for the end of this week was 0.785 percent, 1.5 basis points above Friday's closing level.
The online survey of 91 JGB market participants from major institutions received 29 responses -- a response rate of 31.9 percent.
These included 12 responses from "real money" investors from institutions such as banks, pension and investment funds and insurance companies.
The yield on the benchmark 10-year cash note was flat on Monday at 0.770 percent, while the 10-year JGB futures contract slipped 0.01 point to 144.18.
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