JGBs mostly higher on strong auction, equity rally limits gains

TOKYO: Japanese government bond prices were mostly stronger on Tuesday following robust results in a liquidity-enhancing auction and overnight gains by U.S. Treasuries, although gains were limited by Tokyo shares rallying to a 26-year high.

The two-year yield, five-year yield  and 20-year yield declined by 0.5 basis point to minus 0.190 percent, minus 0.130 percent and 0.560 percent, respectively.

The 10-year yield rose 0.5 basis point to 0.025 percent, losing some momentum after declining 3 basis points the previous day.

The finance ministry's liquidity-enhancing auction, at which it sold 300 billion yen ($2.63 billion) of one- to five-year JGBs, attracted strong demand ahead of this week's debt-purchasing operations by the Bank of Japan, at which market participants can sell bonds to the central bank.

The auction's bid-to-cover ratio, a gauge of demand, rose to 6.6 versus 4.05 at the previous sale.

Japan's Nikkei index jumped to a near 26-year-high on Tuesday as foreign investors piled in on expectations of strong earnings from Japan Inc. and Wall Street's strength underpinning sentiment.