JGBs slip on weaker Treasuries, 2-year sale draws firm demand

27 Oct, 2016

TOKYO: Japanese government bond prices slipped on Thursday with the market tracking an overnight retreat by U.S. Treasuries.

An auction of two-year JGBs, on the other hand, attracted ample investor demand as the shorter-dated maturities had cheapened over the past month.

The bid-to-cover ratio, a gauge of demand, at the 2.3 trillion yen ($22 billion) two-year sale rose to 4.41 from 3.78 at the previous auction last month.

The benchmark 10-year JGB yield was up 1 basis point at minus 0.060 percent and the 30-year yield rose 2 basis points to 0.495 percent.

The JGB market took comments on Thursday by Bank of Japan Governor Haruhiko Kuroda in its stride. Kuroda told parliament that the central bank would not attempt to push down super-long bond yields if they rose further.

The BOJ adopted a yield curve control scheme in September in a bid to keep the 10-year JGB yield around zero percent.

U.S. Treasury debt yields rose overnight, pushed up by a fresh batch of economic data that enhanced the outlook for third-quarter U.S. gross domestic product data due on Friday, hardening expectations for a U.S. rate rise.

Copyright Reuters, 2016

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