TOKYO: Japanese government bonds firmed on Wednesday, bolstered by solid demand at a 20-year auction.
The yield on the benchmark 10-year cash JGB edged down 1 basis point to 0.305 percent, while the 10-year JGB futures price added 0.16 point to end at 148.53 The yield on 20-year JGBs fell two basis points to 1.065 percent.
Japan's Ministry of Finance offered 1.1 trillion yen ($9 billion) of 20-year JGBs, reopening the current issue with a coupon of 1.200 percent. The lowest accepted price at the auction was 101.95 to yield 1.08 percent, slightly above market expectations.
The bid-to-cover ratio, a gauge of demand, improved to 3.59 from 3.04 at last month's sale.
The tail between the average and lowest accepted prices was a narrow 0.03, sharply lower than last month's 0.10, suggesting increased demand for the notes.
Bank of Japan board member Sayuri Shirai said on Wednesday that changing the size of the BOJ's purchases of JGBs, or buying longer-dated JGBs was most likely the first option if policymakers were to opt for additional easing steps.
She told reporters after meeting with business leaders in Matsue, western Japan, that the central bank can hold off on expanding stimulus to reach its inflation target as robust consumption makes firms more confident about raising prices.
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