JGBs off highs, though supported by decent 20-year sale

TOKYO: Japanese government bond prices gave up early gains on Thursday as U.S. Treasury yields pulled off their lows and investors took profits after a smooth 20-year auction.

The benchmark 10-year cash JGB yield was flat at 0.040 percent, up from 0.035 percent earlier, while 10-year JGB futures ended down 0.04 point at 150.57 after rising as high as 150.76 in the morning session.

The benchmark 10-year U.S. Treasury yield stood at 2.245 percent in Asian trading, above its U.S. close on Wednesday of 2.216 percent.

Treasuries have benefited from safe-haven demand this week, amid allegations that U.S. President Donald Trump tried to interfere with a federal investigation. A small but growing number of Trump's fellow Republicans called on Wednesday for an independent probe of possible collusion between his 2016 campaign and Russia, and one even mentioned impeachment.

At the Ministry of Finance's sale of 1 trillion yen ($9.02 billion) of 20-year JGBs with a 0.7 percent coupon, some 35.5348 percent of the bids were accepted at the lowest price of 102.40.

The sale drew bids of 3.84 times the amount offered, down from the previous sale's bid-to-cover ratio of 4.06 times but still suggesting decent demand for the bonds ahead of the Bank of Japan's buying operations on Friday.

The 20-year JGB yield shed 2 basis points to 0.570 percent , after earlier falling as low as 0.560 percent.

MOF data released early on Thursday showed that Japanese investors bought a net 1.821 trillion yen of foreign bonds in the latest week through May 13 after buying a net 425.8 billion yen the week before.

It was the largest amount of foreign buying since the first week of July last year, and the third-highest total since MOF began compiling the data in 2005.