Most JGBs weaken as risk appetite improves

TOKYO: Prices of most Japanese government bonds fell on Thursday as risk appetite improved on hopes for US fiscal stimulus and a survey showed an improvement in Japan's business sentiment, offsetting strong demand seen at a 10-year debt auction.

Benchmark 10-year JGB futures fell 0.05 point to 152.06, with a trading volume of 21,696 lots.

The Japanese finance ministry offered 2.6 trillion yen of 10-year JGBs, with the bid-to-cover ratio, a gauge of demand, rising to 4.06 from 3.15 at the previous sale in September.

In another sign of strong demand, the tail between the average and the lowest accepted prices was 0.01, narrowing from 0.11 last month. But the 10-year JGB yield was unchanged at 0.010pc.

In the super-long zone, the 20-year JGB yield rose half a basis point to 0.400pc, while the 30-year JGB yield climbed 1.5 basis points to 0.605pc.

The 40-year JGB yield added 1 basis point to 0.640pc.

At the shorter end of the curve, the two-year JGB yield rose 1 basis point to minus 0.130pc, while the five-year yield was flat at minus 0.115pc.

Risk-on sentiment kicked in on renewed hopes for US fiscal stimulus after the Trump administration proposed a new stimulus proposal worth over $1.5 trillion to House Democrats.

On the home front, the Bank of Japan's "tankan" survey showed Japanese manufacturers were less pessimistic in July-September compared with the previous quarter when the COVID-19 pandemic had pushed down business sentiment to an 11-year low.

Separately, the bond market reacted little to the Tokyo Stock Exchange suspending Thursday's trade after its worst-ever system glitch.