TOKYO: Japanese government bond prices firmed slightly on Wednesday after Japan's stock market and Wall Street shares fell, with the 10-year yield hitting a one-week low.
The 10-year yield fell 0.5 basis point to 0.815 percent , dropping further from a two-month high of 0.860 percent hit last week.
"Some investors are buying after coming back from summer holidays, as yields are higher than before," said a trader at a Japanese bank.
US shares fell after the S&P 500 index hit technical resistance, helping to drive Tokyo shares lower and underpining JGBs.* The benchmark 10-year JGB futures rose 0.06 point to 143.68, though they were capped by a resistance from the bottom of the cloud at 143.72 on the daily Ichimoku chart.
The immediate focus is on an auction of 20-year JGBs on Thursday. Many market players expect decent demand as the new offer is likely to carry a 1.7 percent coupon, which would be higher than 1.5 percent on last month's issue.
Beyond that, the market is likely to look at how European policymakers can hammer out steps to reduce borrowing costs of Spain and Italy, though few investors see radical progress in the near future.
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