JGB prices steady ahead of 5-year debt auction

Reuters

TOKYO, Oct 16 (IFR) - Japanese government bond prices werelargely steady on Wednesday, ahead of an auction of 2.7 trillionyen ($27.4 billion) of five-year debt later in the day.

The 10-year yield was unchanged at 0.660percent, though it was not far from a two-week high of 0.670percent touched in the previous session.

Cash activity was limited to transactions among dealers inearly trade, JGB traders said.

The Ministry of Finance was to sell the five-year JGBs witha coupon rate of 0.2 percent.

The existing five-year JGBs were alsounchanged at 0.235 percent, a two-week high.

"We recommend a neutral stance if the auction takes place at0.2-0.25 percent because of the absence of an environment thatwould support a sharp yield upswing and the exhaustion ofperiod-start buying seen this month," analysts at the Royal Bankof Scotland wrote in a note.

Many domestic real money accounts were reluctant to chaseprices higher until the U.S. fiscal stand-off is resolved,traders said.

Democratic and Republican leaders in the U.S. Senate couldannounce a deal within hours to extend the government'sborrowing authority until Feb. 7 and quickly reopen federalagencies that have been closed since Oct. 1, a Senate aide said.

Longer-dated JGBs gained modestly, with both the 20- and30-year yields down 0.5 basispoint to 1.525 and 1.660 percent, respectively.

Ten-year JGB futures were steady at 144.26.

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