TOKYO: Most Japanese government bond prices edged higher on Friday, catching a tailwind from US Treasuries as well as concerns about global growth.
JGBs were stronger particularly at the shorter end, helped by firm US Treasuries, which were bolstered by a strong seven-year debt auction.
But some strategists said gains at the shorter end were limited after the Bank of Japan's surprise move last week to spend an extra 10 trillion yen ($124.70 billion) on JGBs as part of its asset-buying programme.
The central bank buys bonds with up to two years left to maturity, so the move primarily lifted prices at the short end of the curve.
"The 2- to 5-year sector has basically run out of value because of the BOJ. You're much better off with T-bills and a smaller amount of longer maturities," said Neale Vincent, strategist at Nomura Securities Co.
The yield on the latest 10-year JGBs slipped a basis point to 0.965 percent.
The yield on 5-year JGBs was down a basis point at 0.300 percent after earlier falling as low as 0.295 percent.
Ten-year JGB futures rose 0.15 point to 142.63, poking above their 10-day moving average of 142.61 and solidly holding above their 25-day moving average at 142.52.
The yield on the 20-year note inched down half a basis point to 1.750 percent, while the 30-year bond yield was flat at 1.930 percent.
Economic fears continued to underpin bond prices. The European Commission forecast that economic output in the euro zone will contract 0.3 percent this year, while the wider European Union will stagnate.
JGBs also took their lead from Treasuries, which firmed after a seven-year auction drew the highest demand from investors and direct bidders since the maturity was reintroduced three years ago.
"US debt prices give the market a bid tone," says Katsutoshi Inadome, a strategist at Mitsubishi UFJ Morgan Stanley Securities.
The market shrugged off the latest warning from Moody's Investors Service that Japan's failure to meet its fiscal targets could have wider implications.
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