TOKYO: Japanese government bonds rose on Friday as a move earlier in the week by the world's major central banks to ease funding strains among banks continued to ease volatility, pushing down the benchmark yield from a four-month high.
Market participants said that Thursday's 2.2 trillion yen ($28.3 billion) auction of 10-year JGBs was well digested given recent financial market turmoil, helping to support Japanese sovereign debt.
"Although Japan's public debt is large, things such as the country's taxation structure and size of its current account surplus are very different from those of troubled economies in Europe, so it is unlikely JGB yields will face a sharp rise," said a trader at a European brokerage.
"The gloomy economic outlook in Europe and emerging economies should keep supporting demand for JGBs."
Lead 10-year JGB futures were up 0.14 point at 142.02, off a four-month low of 141.52 marked on Thursday.
The trader at a European brokerage said that JGB futures have more room to rise but if they fail to go above 142.44, the lower end of the Ichimoku cloud which is seen as major resistance, downside risks may increase again.
Cash bonds were mostly firm as the five-year yield declined 1 basis point to 0.360 percent. The benchmark 10-year yield was down 0.5 basis point at 1.080 percent, off a four-month high of 1.090 percent marked on Thursday.
Meanwhile, 30-year bonds were weighed down as their yields climbed as high as 1.995 percent, staying near a three-month peak of 2 percent hit earlier this week, with auctions in the superlong sector scheduled for coming weeks, market participants said.
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