JGBs tick higher, 10-year yield hovering near 5-month lows

Reuters

TOKYO, Oct 7 (Reuters) - Japanese government bond pricesedged higher on Monday morning, pushing down the 10-year yieldto near five-month lows, with the Bank of Japan supporting themarket with 600 billion yen ($6.2 billion) worth of bond-buying.

The BOJ offered to buy 400 billion yen of JGBs with aresidual maturity of five to 10 years and 200 billion yen inmaturities exceeding 10 years.

The 10-year yield dipped 0.5 basis point to0.645 percent, not far from a five-month low of 0.625 percenttouched on Friday.

Ten-year JGB futures added 0.11 point to 144.47,holding above their five-day moving average of 144.38.

The 20-year yield also eased 0.5 basis pointto 1.495 percent, within striking distance of a five-month lowof 1.475 percent hit last week.

"The 5-7-10-year spread is currently near where it wasaround April 2003, when 10-year yields were roughly at theircurrent levels," Barclays Capital wrote in a note.

"In this sense, one could argue - taking the 5-10-yearsector of the curve in isolation - that levels do not lookparticularly extreme compared with the past," it said.

"However, 20-year yields in 2003 had already fallen to near1 percent and the curve in 10s and longer was so much flatterthat it almost defies comparison."

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