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JGBs rangebound as investors await Fed, BOJ

Tuesday, 29 Oct 2013 | 11:06 PM ET

TOKYO, Oct 30 (IFR) - Japanese government bond prices ended the morning session steady to slightly higher on Wednesday, with the 7-year through 20-year curve steepening by 1 basis point from the previous session.

In the morning session, the benchmark 10-year JGB yield continued to fluctuate in a very narrow range of 0.60 percent to 0.605 percent, while the current 20-yr JGBs recovered most of their earlier losses into the morning close, sending their yield down from 1.505 percent to 1.495 percent, or flat with the previous close.

Several regional banks sold 5-year to 10-year JGBs to take profits after one large savings bank sold 10-year JGBs on Tuesday. But other large domestic institutional investors stayed largely sidelined ahead of the U.S. Federal Reserve's policy announcement later on Wednesday and the Bank of Japan's meeting on Thursday.

As widely expected, the BOJ offered to buy a total of 1 trillion yen ($10.19 billion) of 1-year to 10-year JGBs in three tranches under its JGB buying program.

The central bank purchased 400 billion yen of JGBs maturing in five to 10 years, 350 billion yen of JGBs maturing in three to five years, and 250 billion yen of JGBs maturing in one to three years.

One fund manager at a domestic mutual fund told IFR Tokyo this morning that he expects the benchmark 10-year JGB yield to hover around 0.60 percent for a while, as the 10-year yield stayed in a narrow 0.550 percent to 0.620 percent range from April 10 through May 9 in consolidation mode.

At midday, yields on the current 10-year JGBs were down 0.5 basis point from Tuesday at 0.600 percent. The 5-year notes and the 30-year bonds were not traded actively among brokers.

Lead December JGB futures ended midday at their intraday high of 145.05, up 0.13 point from Tuesday, after hitting an intraday low of 144.93.