Benchmark JGBs steady, 5-year sale awaited

TOKYO: Benchmark Japanese government bonds were steady on Wednesday, while shorter maturities weakened slightly ahead of the next session's five-year sale.

The 10-year cash JGB yield was flat on the day at 0.065 percent, while the 10-year JGB futures contract  finished up 0.01 point at 150.36.

The five-year JGB yield added half a basis point to minus 0.080 percent, while the two-year yield rose 1 basis point to minus 0.130 percent.

"There's a five-year auction tomorrow, so some dealers want to push the short end lower, but mostly the market is consolidating," said Tadashi Matsukawa, head of fixed income investment at PineBridge Investments in Tokyo.

The Ministry of Finance will auction 2.2 trillion yen  ($19.59 billion) of five-year JGBs on Thursday.

JGB investors also awaited a weekend election, which could usher in continued political and monetary stability.

Japanese Prime Minister Shinzo Abe's coalition is on track for a roughly two-thirds majority in Sunday's general election, a survey by Kyodo news agency showed, as its conservative rival led by Tokyo Governor Yuriko Koike appeared to lose momentum.

Japanese companies overwhelmingly want Abe's ruling coalition to stay in power but about two-thirds hope it loses seats, according to Reuters poll published on Wednesday.

On Wednesday, Bank of Japan board member Makoto Sakurai said in a speech to business leaders that the central bank needs to stick with its current framework for monetary easing as the effects of stimulus become stronger as economic growth picks up.

The BOJ's policy board next meets on Oct. 30-31, when it will update its consumer price forecasts.