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

October 7, 2013

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

The BOJ offered to buy 400 billion yen of JGBs with a residual maturity of five to 10 years and 200 billion yen in maturities exceeding 10 years.

The 10-year yield dipped 0.5 basis point to 0.645 percent, not far from a five-month low of 0.625 percent touched 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 point to 1.495 percent, within striking distance of a five-month low of 1.475 percent hit last week.

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

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

"However, 20-year yields in 2003 had already fallen to near 1 percent and the curve in 10s and longer was so much flatter that it almost defies comparison."