Business & Finance

JGBs slip slightly as stocks firm; 5-year sale in focus

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The Ministry of Finance offered 2.5 trillion yen of newly issued 5-year bonds, with a coupon set at 0.2 percent, matching those of the past five sales.

 

The 5-year sale is expected to proceed smoothly as the central bank's monetary policy has pinned yields at the shorter end, market participants said.

 

"It's a matter of small degree.

 

The 5-year sale will probably either be smooth or strong, with the words, open to individual interpretation, but the point is that no one expects it to be weak," said a fixed-income fund manager at a Japanese asset management firm.

 

"Considering that Japanese stocks are rallying today, bonds are not selling off so much," he added.

 

Japan's Nikkei share average rose 0.9 percent as index heavyweight Softbank Corp rallied after the company confirmed a $20 billion acquisition of a US competitor with a loan from four banks that also benefited from the news.

 

US Treasury prices eased on Monday after data showed US retail sales were stronger than expected in September.

 

The 5-year JGB was untraded on Tuesday, with its yield  having closed at 0.195 percent on Monday.

 

The benchmark 10-year yield rose half a basis point to 0.755 percent.

 

The 10-year JGB futures contract ended morning trade down 0.04 point at 144.28, moving away from a nine-week high of 144.34 hit on Friday.

 

On Thursday, the Ministry of Finance will offer 1.2 trillion yen of 20-year JGBs.

 

The 20-year bond was untraded on Tuesday, with its yield closing at 1.650 percent in the previous session. The yields on 30-year debt was flat at 1.915 percent.

 

Copyright Reuters, 2012