Superlong JGBs weaken as BOJ refrains from buying

Reuters

TOKYO, Dec 9 (IFR) - Japanese government bond prices endedthe morning mixed on Monday, with the superlong zone slightlyunderperforming as the Bank of Japan refrained making anypurchases this session under its asset-buying stimulus program.

The 7-year to 10-year zone outperformed the rest of thecurve, as several regional banks bought 10-year JGBs on dips,sending the yield on the current 10-year JGBs down half a basispoint to 0.665 percent.

Last Friday, one large savings bank purchased the current10-year JGBs on dips. The 7-year to 10-year JGBs turned firmeron Monday even though the BOJ did not offer to buycoupon-bearing JGBs, contrary to market expectations.

One corporate pension fund manager told IFR this morningthat he does not expect the majority of other corporate pensionfunds at large Japanese trust banks to start shortening theduration of their bond portfolios soon, because of concernsabout Japan's economic outlook.

Data released on Monday showed Japan's economy expanded lessthan expected in July-September, suggesting that the recoveryremains fragile due to soft global demand.

At midday, the yield on the current 5-year JGBs was unchanged from Friday at 0.20 percent, aheadof Thursday's monthly sale of 2.7 trillion yen ($26.29 billion)of 5-year notes.

In the super-long zone, the 20-year yield rose 0.5 basis point to 1.515 percent, while the 30-year yield also added 0.5 basis point to 1.685 percent aheadof Tuesday's monthly auction of 600 billion yen of 30-yearbonds.

Lead December JGB futures moved in a 144.39-144.69 rangebefore finishing the morning session up 0.16 point at 144.67ahead of Wednesday's contract expiry.

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