TOKYO: Japanese government bonds snapped three sessions of decline and made back some lost ground on Friday, as investors saw a buying opportunity after benchmark yields touched a three-week high in the previous session.
The benchmark 10-year JGB yield fell 2 basis points to 0 .770 percent, moving away from a Thursday session high of 0.795 percent, which was its highest since Sept. 25.
"Some investors saw yesterday's sell-off as the buying opportunity they were waiting for," said a fixed-income fund manager at a Japanese asset management firm.
"It was a 'risk-on' scenario yesterday, but no one can be sure that sentiment has turned a corner, so no one wants to be short ahead of the weekend," he said.
The 10-year JGB futures contract ended morning trade up 0.17 point at 144.06 after falling as low as 143.79 on Thursday, its lowest since Sept. 21.
Their 5-day moving average, now at 144.15, was poised to fall below their 20-day moving average, now at 144.14. On Thursday, the 5-day average fell below the 14-day moving average, which is now a resistance level at 144.19.
The superlong tenor also gained, with the 20-year yield shedding 1 basis point to 1.675 percent.
The 30-year yield fell 1.5 basis points to 1.930 percent after it rose as high as 1.950 percent on Thursday, its highest level since Sept. 20.
"If there is a concern about domestic supply and demand, it is that yields have trended in a narrow range of less than 15 basis points over the past three months despite a broad trend downward since August," said strategists at Barclays in a note to clients.
If the uptrend in yields goes beyond a certain level, they warned that liquidation of those positions might accelerate.
"If the market finds support at 10-year yields of 0.82 to 0.83 percent, it would probably not correct much beyond that, but we believe there is a need to pay somewhat careful attention over the short term," they said.
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