TOKYO, Sept 24: Japanese government bond prices were modestly higher on Tuesday morning, underpinned by stronger US Treasuries, a fall in Tokyo stocks and buying for month-end duration changes.
As widely expected, the Bank of Japan offered to purchase 400 billion yen ($4.05 billion) of 5-year to 10-year JGBs in the secondary market under its massive JGB buying program.
Some life insurers and pension funds bought 20-year and 30-year JGBs sporadically in thin trading for their month-end duration adjustments, forcing dealers to buy more liquid 10-year JGBs for hedging purposes.
Several regional banks sold and bought JGBs to adjust their positions ahead of the end of the first half of the fiscal year on Sept. 30. One regional bank purchased 2-year to 3-year JGBs, as the bank oversold mid-term JGBs late last week.
A weak Nikkei, which dropped 0.7 percent, also prompted some safe-haven demand for JGBs.
At midday, the yield on the current 5-year JGBs was down 1 basis point from Friday at 0.245 percent, while the 10-year yield was down 1.5 basis point at 0.675 percent. Japanese markets were closed on Monday for a public holiday.
In the superlong zone, the 20-year yield was down 2 basis points at 1.575 percent and the 30-year yield was down 1.5 basis point at 1.720 percent.
Lead Dec JGB futures moved in a 143.91 to 144.09 range before finishing the morning session up 0.22 point at 144.08.
Meanwhile, the cheapest-to-deliver 10-year (7-year) JGBs (issue #312 with a coupon of 1.2 percent, due December 2020) added 0.12 to 105.297, sending yields down 1.7 basis point to 0.444 percent.
($1 = 98.6950 Japanese yen)
(agencies)
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