TOKYO: Japanese government bonds slipped on Tuesday, with the benchmark yield creeping back toward last week's 13-month high, as investors positioned to buy at a 20-year sale.
The Ministry of Finance offered 1.2 trillion yen ($11.87 billion) of 20-year notes, reopening issue number 143, which carries a 1.6 percent coupon.
The yield on the 10-year cash bonds rose 2.5 basis points to 0.860 percent, moving back toward last Thursday's high of 1 percent.
"I don't think anyone is expecting a particularly good auction, but it probably won't be a disaster, either. After recent JGB market turbulence, we might see some short-covering from dealers," said a fixed-income fund manager at a Japanese asset management firm.
"Institutional investors have some scope to buy, but some are hesitant and are waiting a little longer to watch where the market is heading," he said.
Investors also await direction from overseas, he added, after both US and UK markets were closed for holidays on Monday.
"Dip-buying needs may have eased somewhat now that yields have come down from their peak, but there should still be decent demand as the market moves into a period when month-end extension demand can be expected from pension funds," strategists at Barclays said in a note to clients.
Funds often buy near the end of a month to extend the duration of their bond portfolios.
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