JGBs edge higher, underpinned by month-end buying

TOKYO: Japanese government bonds edged up on Friday, bolstered by month-end buying and the Bank of Japan's asset purchases.

The benchmark 10-year yield fell half a basis point to minus 0.120 percent, while June 10-year futures ended up 0.10 point at 152.03.

The Bank of Japan offered to buy 240 billion yen of 10- to 25-year JGBs and 160 billion yen of 25- to 40-year JGBs under its asset buying programme.

But overall market moves were small, as investors remained wary ahead of Japan's official decision on whether it will go ahead with a planned sales tax increase.

"There is just some month-end position adjustment today," said a fixed income fund manager at a European asset management firm.

According to government sources, Japanese Prime Minister Shinzo Abe will postpone the sales tax hike planned for next year, perhaps by as much as three years, a move he will justify as part of G7 efforts to avert another global financial crisis.

Data released earlier in the session fanned hopes for more BOJ easing steps. Japan's core consumer prices fell for the second straight month in April, while a separate index calculated by the central bank also showed consumer inflation slowing to a near one-year low.

JGBs remain a favoured asset for many investors under the BOJ's extensive monetary easing scheme and negative interest rate policy, which has helped push rates to record lows.

The highest accepted yield of 0.4000 percent at an auction of 40-year JGBs on Thursday was a fresh record low.

In the corporate bond market, Toyota issued 40 billion yen of 10-year bonds with a yield of 0.090 percent, the lowest ever for a corporate issue, and 20 billion yen of 20-year bonds yielding 0.343 percent.