TOKYO: Japanese government bonds rose for a second session on Monday, with benchmark yields moving away from a three-week high touched last week, reflecting weaker stocks and conviction that the Bank of Japan is committed to its easy monetary stance.
BoJ Governor Masaaki Shirakawa said in a speech on Monday that the central bank remains resolved to maintain its ultra-easy monetary policy, keeping alive expectations of further stimulus.
Sources familiar with BOJ thinking said the central bank will likely trim its long-term economic and price forecasts at its next meeting on Oct. 30, with no internal consensus yet on whether it will ease further.
BoJ policy is expected to support the Ministry of Finance's sale of 2-year notes on Thursday, as the central bank buys much of the new issuance of that maturity. With no major auctions scheduled for this week, supply/demand conditions are not a major concern, market participants say.
Also underpinning JGB market sentiment, Japanese stocks weakened after data showed Japan's exports fell more than expected in the year to September, while manufacturer sentiment hits its lowest point since early 2010.
"Whenever stocks move down, there are investors who want to buy bonds. But there aren't so many short JGB positions that need to be covered, or people who need to buy, so overall, the buying is not strong," said a fixed-income fund manager at a Japanese trust bank.
The benchmark 10-year JGB yield fell 1 basis point to 0 .770 percent, moving away from last week's high of 0.795 percent, which was its highest since Sept. 25.
The 10-year JGB futures contract ended morning trade up 0.12 point at 144.09, moving away from last week's low of 143.79, which was its lowest since Sept. 21.
The 20-year yield inched down half a basis point to 1.670 percent, while the 30-year JGB was untraded after its yield closed at 1.930 percent on Friday.
A weekly Thomson Reuters survey of JGB market sentiment showed a gauge of mood turned positive after three readings in negative territory, with most respondents still expecting yields to trade sideways.
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