JGBs tick up even as BOJ reduces buying in 5-10 yr bonds

TOKYO: Japanese government bond prices ticked up slightly on Monday, supported by firmness in overseas peers even after the Bank of Japan reduced its buying in five- to ten-year JGBs in its market operation.

The price of 10-year JGB futures rose 0.03 point to 150.25 after U.S. and European bonds had gained on speculation that a strong euro could make it difficult for the European Central Bank to wind back its stimulus.

The yield on the benchmark 10-year JGBs stood flat at 0.065 percent, matching a three-week low touched on Friday.

The BOJ reduced the size of its purchase in the five- to ten-year JGBs on Monday to 470 billion yen from the previous 500 billion yen.

The central bank had stepped up the purchase in those maturities on July 7 from 450 billion yen in the past in order to curb rises in the 10-year JGBs as the yields threatened to breach its policy target of "around zero percent".

"I wouldn't be surprised if the BOJ would reduce the purchase amount further to 450 billion yen," said a trader at a Japanese brokerage firm.

The longer end of the market was softer ahead of an auction of 40-year JGBs on Tuesday.