JGBs soften on profit-taking
TOKYO, Oct 3 (IFR) - Japan government bond prices ended Thursday morning session modestly lower in the 7-year and longer zone.
JGBs in the 5-year to 20-year zone opened slightly higher on the back of firmer U.S. Treasuries overnight.
But JGB prices turned into negative territory in the 10-year zone in mid-morning trading. A few large banks seemed to have sold the current 10-year JGBs in relatively large lots, after its yield fell sharply from Tuesday's auction yield of 0.682 percent to 0.635 percent Thursday morning.
Super-long yields followed the benchmark 10-year JGB yield in very thin trading. Meanwhile, 4-year JGBs saw relatively good two-way flow in the morning session. Large domestic banks sold mid-term JGBs in relatively large lots, while many regional banks bought them ahead of the Bank of Japan's policy decision on Friday, JGB traders and money managers said.
JGB players widely expect the BOJ to keep its current accommodative policy this month. One corporate pension fund manager said that the majority of fund managers at the trust bank expect JGB yields to rise slowly in response to stronger-than-expected economic fundamentals in the U.S. despite the current government shutdown.
On Thursday, the Ministry of Finance re-offers 300 billion yen in off-the-run 20-year, 30-year and 40-year JGBs in a liquidity enhancement auction.
The auction results due at 0345 GMT will have some impact on super-long JGBs.
At midday, the yield on the current 5-year JGBs are down 0.5 basis point at 0.225 percent, after dropping as low as 0.220 percent, their lowest level since May 9.
The 10-year yield was up 1.5 basis points at 0.655 percent .
In the super-long zone, the 20-year yield was up one basis point at 1.520 percent in extremely thin trading, while the 30-year yield was also up one basis point at 1.645 percent.
The lead December JGB futures moved in a 144.27-144.49 range before finishing down 0.05 point at 144.30.