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JGB market sentiment deteriorates further - Thomson Reuters survey

TOKYO, Oct 9 (Reuters) - A gauge of sentiment in the Japanese government bond market has gone deeper into negative territory, though investors expect buying at the beginning of the second half of the fiscal year to keep yields from rising far from recent ranges, a weekly Thomson Reuters survey showed on Tuesday.

The weekly poll's JGB bull-bear diffusion index, calculated by subtracting the number of bearish market players from those that are bullish, came in at minus 25, deteriorating from minus 17 in last week's survey .

The survey found that 41.7 percent of total respondents expect JGB yields to trade sideways, up from 20.7 percent in the previous poll. Another 41.7 percent of respondents foresee JGB yields rising this week, down slightly from 48.3 percent in the last survey.

The percentage of respondents expecting lower rates fell to 16.7 percent from 31.0 in last week's poll.

The median forecast for the 10-year JGB yield for the end of this week was 0.785 percent, one basis point above Friday's closing level. Japanese markets were closed for a national holiday on Monday.

The online survey of 91 JGB market participants from major institutions received 36 responses, for a response rate of 39.6 percent. These included 14 responses from "real money" investors from institutions such as banks, pension and investment funds and insurance companies.

These "real money" investors were slightly less pessimistic than other respondents, with their sentiment diffusion index coming in at minus 22 and their 10-year yield expectation at 0.780 percent.

JGB sentiment weakened after a selloff in U.S. Treasuries on Friday after upbeat U.S. employment data. The U.S. Labor Department said the unemployment rate fell to a four-year low of 7.8 percent in September, down from 8.1 percent in August, as 114,000 jobs were added.

On the JGB supply-side, superlong maturities could face pressure ahead of the Ministry of Finance's 30-year bond sale on Thursday.

The yield on the benchmark 10-year cash note added half a basis point on Tuesday to 0.780 percent, while the 10-year JGB futures contract slipped 0.02 point to 144.08.

(JGB market participants interested in participating in future surveys can contact yoshiyasu.shida@thomsonreuters.com.)

(Reporting by Yoshiyasu Shida; Writing by Lisa Twaronite; Editing by Joseph Radford)

((lisa.twaronite@thomsonreuters.com)(+81 3 6441 1870 Reuters Messaging: lisa.twaronite.thomsonreuters.com@reuters.net))

Keywords: MARKETS JAPAN JGB/

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