TOKYO: Japanese government bonds rose on Monday after US Federal Reserve Chairman Ben Bernanke left the door open for further US easing, but gains were limited ahead of this week's supply.
The Ministry of Finance will auction 10-year JGBs on Tuesday and hold a 30-year sale on Thursday.
The Fed chief on Friday expressed "grave concern" for the US job market and said the central bank was prepared to take further steps as needed.
Investors await the key nonfarm payrolls report on Friday to gauge what steps the central bank might take at it its Sep. 12-13 policy meeting.
The benchmark 10-year JGB futures contract ended morning trade up 0.12 point at 144.12 after rising as high as 144.19, their loftiest level since Aug. 9. The contract's last trading day is Sep. 12.
"We currently expect a preponderance of long rolls to put narrowing pressure on the calendar spread as the rolls occur approaching the change in the most active contract," said strategists at Credit Suisse in a note to clients on Monday.
But with little room for a narrowing of the calendar spread, which is recently trading below its fair value, they recommend investors buy the spread when its narrowing trend gains momentum. The calendar spread refers to a trade in which the investor simultaneously buys and sells a futures position at different maturity months.
The 10-year yield fell 1 basis point to 0.785 percent.
The 10-year yield remains mired in the middle of its recent range. It rose to a two-month high of 0.860 percent in mid-August, after falling to a nine-year low of 0.720 percent touched several times in late July.
Longer-dated debt continued to lag, with the 30-year yield losing half a basis point to 1.875 percent. The 20-year JGB was untraded.
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