Benchmark 10-year Japanese government bond futures extended gains to a six-month high on Friday as share prices weakened later in the session, with investors remaining cautious about riskier assets amid increasing concerns on Greece's debt woes.
But cash bonds were capped by profit-taking ahead of the quarter-end and as investors were reluctant to chase prices higher given uncertainty in Japanese politics and on the outlook for the country's fiscal policy. Benchmark 10-year JGB futures climbed 0.10 point to 141.17, after rising to a six-month peak of 141.33, helped by worries on Greece's problems and a soft patch in the US economy.
The benchmark 10-year yield was up 0.5 basis point at 1.120 percent after marking 1.105 percent, matching a 6-1/2 month low that hit in mid-May. Big Japanese investors are taking profits in JGBs ahead of the end of June in part to make up for losses they have made on Tokyo Electric Power Co (Tepco) debt, a trader at a Japanese bank said Tepco bond prices have fallen sharply on worries that it could be forced into bankruptcy as it is not clear if the government's taxpayer-funded scheme to help the company compensate victims of a nuclear accident will be approved by parliament.
The 20-year bond yield gained 2 basis points to 1.915 percent, while the five-year yield was down 0.5 basis point at 0.415 percent. Five-year bonds maturing this month carried coupons of 1.3 to 1.5 percent, more than the 1.2 percent on current 10-year JGBs.
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