JGBs slip as stocks rise; focus on 20-year sale, Fed outcome
TOKYO, Sept 18 (IFR) - Japanese government bond prices were down on Wednesday morning, weighed by a sharp rise in Tokyo stocks and as investors looked ahead to the 20-year JGB auction later in the day.
The Nikkei stock average rose 1.8 percent, offseting the positive lead from firmer U.S. Treasuries on Tuesday.
The Ministry of Finance set the coupon of the new 20-year JGBs (issue number 146, maturing in Sept. 2033) at 1.700 percent, unchanged from last month's sale. JGB players widely expect Wednesday's 20-year JGB auction to go smoothly on the back of sufficient dip-buyers ahead of the massive quarterly redemption of JGBs.
Traders also remained cautious ahead of an expected tapering of the Federal Reserve's massive bond-buying programme at the conclusion of the U.S. central bank's two-day meeting later on Wednesday.
A few money managers at domestic pension funds told IFR that they do not expect economic fundamentals to improve rapidly in Japan. One of them seemed to be concerned about the impact on emerging markets from the Fed's decision on its stimulus programme.
Those money managers were reluctant to read too much into the recent recovery in demand for capital spending.
The yield on the current 5-year JGBs was up 0.5 basis point at 0.265 percent, while the yield on the 10-year note was up 1 basis point at 0.7200 percent.
The yield on the current 20-year bond was up 0.5 basis point at 1.645 percent, while the yield on the 30-year bond also rose 0.5 basis point to 1.790 percent.
JGB futures moved in a narrow range between 143.58 and 143.66 before finishing the morning session down 0.05 point at 143.60.