Longer-dated JGBs firm as 30-year auction attracts demand

TOKYO: Japanese government bond prices were little changed on Tuesday, though longer-dated bonds firmed due to an upward pull from a well-received auction of 30-year bonds.

The firming of the longer-dated bonds flattened the yield curve, with the 10- to 30-year yield spread tightening to 72 basis points, the narrowest in almost six weeks.

The September 10-year year JGB futures contract rose 0.07 point to 150.41, while the benchmark cash 10-year JGBs  were flat at 0.110 percent.

The 20-year JGB yield dipped 1 basis point to 0.605 percent, while the 30-year JGB yield lost 1.5 basis point to 0.830 percent.

The 40-year JGB yield also fell 1.5 basis point to 0.965 percent, briefly falling to as low as 0.960 percent, its lowest level in more than a month.

The benchmark five-year JGBs and two-year JGBs  were untraded.

An auction of 700 billion yen ($6.28 billion) 30-year JGBs drew strong demand on Tuesday.

The bid-to-cover ratio, a gauge of demand, came in at 4.23 percent, slightly higher than the average bid-to-cover ratio of 4.2 from the previous 12 auctions.

Market participants said the auction demand was solid.

The Ministry of Finance delayed the announcement of the results by 25 minutes due to technical but not system-related glitches.