TOKYO: Yields on 30-year Japanese government bonds rose to a two-week high on Wednesday ahead of an auction of the notes with the same maturity, while yields on shorter-ended notes fell.
The 30-year JGB yield rose 4 basis points (bps) to 1.475%, its highest since Sept. 28.
“Positive factors for the auction are the level of the yield, which is high, and the ongoing support from the Bank of Japan’s bond purchases,” said Gen Taniguchi, analyst at Mizuho Securities.
But he said high market volatility and the uncertain outlook over future yield movements were weighing on investor sentiment.
The 20-year JGB yield rose 3 bps to 1.060%.
Yields on shorter ended notes fell, with those on so-called cheapest to deliver bonds with seven year maturity falling to as low as 0.211%, after rising to a two-week high of 0.230% in the previous session. “Futures have been cheap relative to cash bonds.
That became even more obvious in the previous session,“ said Ataru Okumura, strategist at SMBC Nikko Securities.
“Investors might have bought back futures as they saw declines in prices, which also lifted prices of the seven-year bonds.”
The seven-year bond is the cheapest note to deliver to satisfy futures contracts, so their prices are linked. Benchmark 10-year JGB futures rose 0.11 point to 148.36, with a trading volume of 5,435 lots.
Ten-year JGBs untraded for record third straight session
The five-year yield fell 0.5 bps to 0.055%. The benchmark 10-year JGBs were not traded for a fourth session, with the yield unchanged from Oct. 5 at 0.245%.
The 40-year JGBs were not traded and the yield was at 1.640%.
The two-year JGBs were not traded and the yield was at -0.060%.
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