Benchmark JGB yields at 3-week low on slower growth concerns

TOKYO: Japanese government bonds firmed on Monday, pushing benchmark yields to a three-week low, as fears about slowing global growth returned to the fore, adding to the appeal of safe haven fixed income assets.

 Japanese equities markets sagged in line with regional counterparts, bolstering bonds, though most market participants did not foresee significant moves in yields this week.

"The recurrence of the global slowdown concerns is supporting the market today," said Maki Shimizu, senior strategist at Citigroup Global Markets Japan.

Superlong maturities may find support this week as some market participants see investors extending the duration of their portfolios in the final trading week of the month and the quarter.

"There might be some duration buying, but overall, this is a week in which rates won't move much, with bonds supported by global economic fears," said a fixed-income fund manager at a Japanese trust bank in Tokyo.

  Short-term bonds, on the other hand, are anchored by the Bank of Japan's easy monetary policy, with the central bank buying JGBs with up to three years left to maturity under its quantitative easing programme.

 Last week, the BOJ said it will increase its asset buying and loan programme by 10 trillion yen ($127.9 billion) to 80 trillion yen, with the increase aimed at government bonds and treasury discount bills.

 A two-year auction on Thursday is expected to proceed smoothly, market participants said, as the central bank now buys much of the supply of that maturity.

 The minutes from the BOJ's Aug. 8-9 meeting released on Monday showed some board members expressed concern that a prolonged slowdown in overseas economies could delay Japan's recovery.

 A weekly JGB market survey conducted by Thomson Reuters found that most respondents did not expect big market moves, with 64.3 percent expecting yields to move sideways, up from 43.6 percent in the previous survey.

  The 10-year JGB futures contract for December ended up 0.14 point at 143.94 after rising as high as 143.99, its highest level since Sept. 6.

The yield on the benchmark 10-year cash bond gave up 1 basis point to 0.790 percent, its lowest level since Sept. 4, though it still within this month's narrow range between 0.775 percent and 0.835 percent.

The 20-year bond yield slipped half a basis point to 1.660 percent.

The yield on the 30-year bond fell 1 basis point to 1.910 percent after it rose to a more than five-month high of 1.950 percent last week.