JGBs slightly down ahead of 10-year sale
TOKYO, Oct 1 (IFR) - Japanese government bonds eased slightly ahead of a sale of 10-year notes, the first major JGB auction in the fiscal second half.
JGBs in the 10-year and longer zone turned modestly weaker in late morning trading on the back of weaker U.S. Treasuries in Asia and higher Tokyo stocks ahead of a possible U.S. government shutdown over Republican efforts to halt President Barack Obama's healthcare reforms.
According to a few money managers, one megabank sold 4-year JGBs and bought 5-year JGBs in the morning session, after shifting from 3-year JGBs into 5-year JGBs on Monday. A few regional banks sporadically purchased 10-year JGBs on dips in late morning trade.
The Ministry of Finance set the coupon of the 10-year JGBs it offered at 0.8 percent, unchanged from last month, re-opening the current issue.
JGB players widely expect today's 10-year JGB auction to go relatively smoothly, as it is hard for short-term players to sell 10-year JGBs short aggressively due to the Bank of Japan's massive JGB buying program.
Earlier, the BOJ's quarterly tankan survey of business sentiment showed Japanese big manufacturers' sentiment improved more than expected in the three months to September, cementing the case for Prime Minister Shinzo Abe to proceed with a planned sales tax hike next year.
Abe is expected to announce the hike in the national sales tax on Tuesday and also launch an economic stimulus package.
The yields on the current 5-year JGBs was unchanged at 0.240 percent, while the yield on the current 10-year notes added 0.5 basis point to 0.685 percent.
In the super-long zone, the 20-year yield rose 0.5 basis point to 1.570 percent, while the 30-year yield also rose 0.5 basis point to 1.705 percent.
Lead Dec JGB futures moved in a 144.06 to 144.16 range before finishing the morning session down 0.06 at 144.06.