TOKYO: Sentiment towards Japanese government bonds deteriorated for a third straight week, a Thomson Reuters survey published on Monday showed, with the poll's sentiment index skidding to its lowest level since the survey began in June 2011.
Safe-haven fixed-income assets lost much of their appeal after euro zone leaders agreed on Friday to let their rescue fund inject aid directly into lenders, buy bonds of debt-laden countries and create a single banking supervisor.
Selling is also expected ahead of Tuesday's 2.3 trillion yen ($29 billion) 10-year auction.
The JGB bull-bear diffusion index, measuring those who believe yields will fall against those who expect them to rise, slipped to minus 61 from minus 11 in the previous poll taken one week earlier.
The median forecast for the 10-year JGB yield at the end of this week was 0.850 percent, up 1.5 basis points from Friday's closing level of 0.835 percent.
The online survey of 102 JGB market participants from major institutions was conducted from Friday afternoon until 8 a.m. on Monday (2300 GMT Sunday). The poll received 56 responses, for a response rate of 54.9 percent, including 25 responses from "real money" investors from institutions such as banks, pension and investment funds and insurance companies.
The survey was conducted before the release of the Bank of Japan's quarterly tankan survey of business sentiment, which showed that big Japanese manufacturers were more optimistic than expected.
The survey found that 66.1 percent of total respondents expect JGB yields to rise this week, up from 32.6 percent in the previous survey, while only 5.4 percent of respondents expect them to fall, down from 21.7 percent.
Some 28.6 percent of respondents expect yields to trade sideways, down from 45.7 percent in the last poll.
The 10-year yield was up half a basis point at 0.840 percent in Monday morning trade, moving away from a nine-year low of 0.790 percent hit on June 4.
The 10-year JGB futures contract for September was down 0.06 point at 143.63.
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