JGB Prices Down on Soft Auction, Budget Worries

TOKYO, Nov 27 (Reuters) – Japanese government bond (JGB) prices slipped on Friday following mediocre results of two-year JGB auction and as the Ministry of Finance said market players think they can absorb more 20- and 40-year JGBs next fiscal year.

The benchmark 10-year yield rose 0.5 basis point to 0.025% , rising above the yield on Portugal’s 10-year bonds. Benchmark 10-year JGB futures fell 0.05 point to 152.05, with a trading volume of 21,583 lots.

The auction of two-year JGBs attracted bids 3.21 times the offer of 3.0 trillion yen ($28.87 billion), a smaller bid-to-cover ratio compared with 3.98-times in the previous auction.

Investors also weighed the government increasing bond sales next fiscal year from April, as it started to sound out market players before it compiles the budget plan next month.

A senior official from the Ministry of Finance said on Thursday that market players told a ministry panel meeting that the market can absorb more issues in 20- and 40-year tenors.

Japan’s ruling party will urge the government to lay out a big, decade-long spending programme to promote green investment, while pressing for a short-term pandemic relief package as well.

The 20-year JGB yield rose 0.5 basis point to 0.395% while the 30-year JGB yield was flat at 0.650%.

The 40-year JGB yield rose 0.5 basis point to 0.700%.

At the shorter end of the market the two-year yield rose 0.5 basis point to minus 0.150% while the five-year yield rose 0.5 basis point to minus 0.110%.

($1 = 103.93 yen)

(Reporting by Tokyo Markets Team; Editing by Vinay Dwivedi)

Source: Reuters

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