TOKYO: Japanese government bond prices edged up on Monday, with the 30-year yield touching an eight-week low as renewed fears about the European debt crisis and expectations of future Bank of Japan easing steps added to the appeal of fixed-income assets.
Expectations of more easing steps from the Bank of Japan continued to underpin JGBs. The BOJ held policy steady as expected last week, and sources said the central bank could ease by increasing government bond purchases under its 65 trillion yen asset-buying and loan programme at its next meeting on April 27.
"We are not going to see much movement ahead of the BOJ meeting and with easing expected, no one is selling bonds. Worries about Spain's debt situation are also keeping demand firm," said a fixed income fund manager at a Japanese trust bank.
The Spanish benchmark government bond yield soared on Friday after data showed Spanish banks borrowed heavily from the European Central Bank in March, reviving concerns over struggling euro zone countries' ability to finance their debt.
The yield on the latest 10-year notes inched down half a basis point to 0.935 percent, matching a nadir hit last Wednesday, the its lowest level since Jan. 16. A break below that low would take the benchmark cash bond yield to levels not seen since November 2010.
The June 10-year JGB futures contract rose 0.08 point to 142.67.
The 30-year JGB yield was flat at 1.895 percent after falling as low as 1.890 percent, its lowest level since Feb. 20.
The yield on 20-year JGBs lost 1 basis point to 1.710 percent, after earlier retracing Friday's low of 1.705 percent, which was its lowest since Feb. 3.
On Tuesday, the finance ministry will offer 2.5 trillion yen of five-year JGBs.
One respondent to Reuters' weekly JGB market survey expected strong demand at the auction from banks and brokers covering their short positions.
JGB market participants expect long-term yields to remain in a range this week, the survey showed.
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