JGB prices steady, shrug off stocks rally on U.S. fiscal deal

Reuters

TOKYO, Oct 17 (IFR) - Japanese government bond prices werelargely steady on Thursday, supported by Bank of Japanbond-buying and a solid five-year debt sale in the previoussession, even though Tokyo shares rose to a three-week highafter Washington reached a deal on its fiscal impasse.

The 10-year JGB yield edged up 0.5 basispoint to 0.640 percent after falling 2.5 basis points onWednesday after the 2.7 trillion yen ($27.3 billion), five-yearbond sale attracted robust demand.

The five-year bond with a 0.2 percent coupon rate drew abid-to-cover ratio of 4.83 on Wednesday, up from the previousauction of 3.3.

The five-year yield was flat at 0.220 percent,hovering near a five-month low of 0.210 percent touched in earlyOctober. Its yield fell 2 basis points on Wednesday.

"With five-year yields having approached 0.2 percent again,we believe there will be a need to remain cautious about thedownside for JGB yields," analysts at Barclays Capital wrote ina note.

The market was also supported by the BOJ's offer to buy 850billion yen worth of JGBs with residual maturities between oneand more than 10 years, as part of its programme to revivegrowth in the world's third-largest economy.

The U.S. Senate overwhelmingly approved a deal on Wednesdayto end a political crisis that partially shut down the federalgovernment and brought the world's biggest economy to the edgeof a debt default that could have threatened financial calamity.

Japan's Nikkei share average and other Asian sharesclimbed on the news. The Nikkei advanced 1.2 percent.

The 20-year yield was also unchanged at 1.505percent, while the 30-year yield inched up 0.5basis point to 1.645 percent.

Ten-year JGB futures were steady at 144.47.

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