JGBs ease ahead of debt auction on BoJ disappointment

31 Oct, 2012

 

The 10-year yield added 1 basis point to 0.770 percent and was up 0.5 basis point on the month.

 

Ten-year JGB futures fell 16 ticks to 144.24, holding above their five-day moving average of 144.23.

 

"Since we have a rebound today, it's pushing the yield high in JGBs. But it's also disappointment with the BoJ," said Maki Shimizu, senior strategist at Citigroup Global Markets Japan.

 

The central bank said it will increase its asset purchasing programme by 11 trillion yen ($138 billion) to 91 trillion yen, but the meeting on Tuesday took longer than usual, raising market hopes that it was considering steps beyond those already expected.

 

"We have payroll data...and the US presidential election next week. Events are still ahead. People will find it difficult to take direction," she said, adding that she expected the 10-year yield to trade in a range of 0.750 and 0.790 percent.

 

Yields on 20-year debt ticked up 1 basis point to 1.700 percent, while those on the 30-year bonds edged up 1.5 basis points to 1.960 percent.

 

So far this month, the longer-dated sectors have underperformed, mainly due to concerns over political issues and investors positioning at the start of the second half of Japan's financial year ending March 2013.

 

The 20-year yield is up 5.5 basis points, on track for its biggest monthly rise in a year, and the 30-year yield has risen 77 basis points.

 

Copyright Reuters, 2012

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