Ten-year JGB yield rises, 30-year down ahead of auction


TOKYO, Oct 10 (Reuters) - Yields on benchmark Japanesegovernment bonds rose on Thursday, although that of thelonger-dated 30-year debt eased ahead of an auction of the samematurity later in the day.

The Ministry of Finance was to sell 600 billion yen ($6.2billion) of 30-year debt with a coupon rate of 1.8 percent.

"It is possible that superlong JGBs will fall out of favournow that the 20-year and 30-year yields have fallen below theapparent buying thresholds of 1.7 and 1.8 percent,respectively," analysts at Morgan Stanley MUFG wrote in a note.

"While the BOJ publishes only rough targets for itsJGB-buying operations ... the results of its operation sinceJune have shown a comparatively high allocation to the over20-year sector. Such purchases may continue to providenon-negligible support from a supply/demand perspective."

The 30-year yield dipped 0.5 basis point to1.635 percent, not far from a five-month low of 1.610 percenttouched last week.

Yields on the 20-year debt were steady at1.505 percent.

The 10-year yield was weaker, however, adding1 basis point to 0.660 percent. The 10-year JGB futures were flat at 144.39.

Earlier, data showed Japan's core machinery orders rosefaster-than-expected in August, posting its first rise in threemonths, in a welcome sign for capital spending seen as vital fordurable recovery in the world's third-largest economy.

Japanese data also showed that in the wake of the U.S.fiscal impasse, Japanese investors sold a record amount offoreign bonds on a net basis last week, offloading nearly $23billion worth.

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