TOKYO: Japanese government bonds inched higher on Monday, but stuck close to recent ranges as investors awaited the outcome of the Bank of Japan's regular two-day policy meeting now underway.
At its two-day meeting which concludes on Tuesday, the BOJ is expected to extend a loan programme for growth industries and stress its readiness to take more monetary steps.
Some market participants attributed the firmer market tone to shortcovering, but strategists expect limited moves for the time being, ahead of the close of Japan's fiscal year.
"We're approaching the fiscal year end, so no one wants the market to move much, or volatility to pick up. It will be business as usual this week," says Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch.
"Last week, the focus was on Greece, but this week, the market is turning to macro economic factors."
Ten-year JGB futures rose 0.15 point to 142.44, while the yield on the latest 10-year JGB slipped half a basis point to 0.980 percent.
The yield on the 20-year note fell one basis point to 1.755 percent.
JGBs shrugged off data released early in the session that showed Japan's core machinery orders rose at a faster pace than expected in January.
Japanese government bond market participants expect the benchmark 10-year yield to creep higher this week, after robust US jobs figures raised prospects of a continued economic recovery, quashing demand for safe-haven assets, a Reuters weekly survey showed on Monday.
The US Labor Department said on Friday that US employers added more than 200,000 jobs for a third straight month.
Policymakers at the US Federal Reserve will also meet on Tuesday this week to review rates.
"Both US and Japanese central banks are likely to stay on hold this week after Greece reached a debt deal," Satoshi Yamada, chief quantitative analyst at SMBC Nikko Securities, said in a weekly JGB survey response.
"There is a 20-year JGB auction later this week so the yield curve could steepen but there might be some buying after the auction so rise in yields would be limited," he added.
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