U.S. Markets closed

JGBs tread water as Fed awaited, BOJ stays out of market

A woman walks past the Bank of Japan headquarters in Tokyo March 23, 2012. REUTERS/Toru Hanai

TOKYO, Sept 17 (IFR) - Japanese government bond prices were flat across the curve on Tuesday morning as investors sat on their hands ahead of a two-day U.S. Federal Reserve meeting at which the central bank is expected to announce a decision on reducing its stimulus.

Price moves were also muted as the Bank of Japan did not offer to buy JGBs on Tuesday under its massive bond-buying programme.

The yield on the current five-year JGBs was unchanged from Friday at 0.265 percent, while the 10-year yield was flat at 0.720 percent. Japanese financial markets were closed on Monday for a public holiday.

The 20-year yield was also flat, at 1.655 percent, ahead of Wednesday's monthly auction of 1.2 trillion yen (7.6 billion pounds) in 20-year JGBs.

The lead JGB futures contract moved in a 143.56 to 143.77 range before finishing the morning flat at 143.58.

Several money managers at domestic corporate pension funds and regional banks said they expect the benchmark five-year JGB yield to stay below the 0.300 percent line for the time being even if the Nikkei stock average (.N225) breaks above 15,000.

They see the BOJ buying midterm JGBs to keep rates lower, although recent remarks by Fed officials have been pushing U.S. short-term interest rates unexpectedly higher.

The Nikkei average was last down 0.2 percent at 14,376. ($1 = 98.7900 Japanese yen)

(Reporting by Masatsugu Hisatsune; Editing by Chris Gallagher)