TOKYO: Longer-dated Japanese government bond yields fell on Thursday, flattening the yield curve, following strong demand at a sale of the 20-year paper.

The 20-year JGB yield dropped 2 basis points (bps) to 1.935% as of 0432 GMT, retreating from a 13-year high of 1.960% hit on Wednesday.

The 30-year yield declined 1 bp to 2.215%, while the 10-year yield eased 0.5 bp to 1.080%.

Benchmark 10-year JGB futures rose 0.02 yen to 142.84. Bond yields move inversely to prices.

While the auction result was “stronger than initially thought,” the so-called super-long yields are unlikely to remain depressed for long, said Shoki Omori, chief Japan desk strategist at Mizuho Securities.

“The recent pattern for long-end auctions is the result comes out better than expected but then the bonds sell off in the following hours or days,” he said.

“Long-end JGB performance has been weak over the past few weeks, as there are no real buyers of super-long bonds.” At the shorter end, the two-year JGB yield was flat at 0.335%, while the five-year yield rose 0.5 bp to 0.605%.

The gap between two- and 30-year yields narrowed by 1 bp to 188 bps.

Japan’s 2 year bond yield hits 13-year high as BOJ chief hints chance of another rate hike

The finance ministry sold 755.5 trillion yen of 20-year bonds on Thursday, with measures of demand improving from the previous month’s auction.

The bid-to-cover ratio improved to 3.80 from 3.27, and the tail - the gap between the average and the lowest successful bid price - narrowed to 0.05 yen from 0.07 yen.


200 characters