TOKYO: Benchmark Japanese government bonds inched lower on Tuesday, while the 30-year zone edged up and a solid 10-year sale supported market sentiment.
Earlier, a few domestic long-term investors bought 30-year JGBs to average down their costs ahead of the massive quarterly JGB redemption on June 20.
The Ministry of Finance sold 2.1904 trillion yen ($21.44 billion) of 10-year JGBs with a lowest accepted price of 99.91, and a coupon of 0.60 percent, the same as the current issue.
The bid-to-cover ratio, which gauges market demand, rose to 3.74, from 3.54 at last month's 10-year sale.
The yield on the current 10-year JGBs rose 0.5 basis point from Monday to 0.585 percent, compared with a high of 0.590 percent earlier in the session.
In the superlong zone, the 20-year yield was flat at 1.445 percent, after rising to 1.450 percent earlier. The 30-year yield inched down 0.5 basis point to 1.690 percent, though gains were limited by caution ahead of Thursday's monthly 400 billion yen 30-year JGB auction.
The 5-year JGB was yet to be actively traded among brokers.
A drop in U.S. Treasuries prices overnight weighed on JGB prices. The yield on the 10-year U.S. Treasuries posted the largest daily advance in more than six weeks on Monday, jumping back to 2.53 percent compared with an 11-month low of 2.40 percent hit on Thursday.
The Nikkei financial daily reported that Japan's $1.26 trillion Government Pension Investment Fund could raise its investment in domestic stocks to 20 percent of its portfolio from the current 12 percent.
Such a move could be negative for JGBs in the future though it had a muted market impact on Tuesday.
Ten-year lead June JGB futures moved in a very narrow 145.31 to 145.36 range before finishing the morning session down 0.04 point at 145.36. Futures were last down 0.01 point at 145.39.
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