JGBs Little Changed, 40year Auction Attracts Ample Demand

TOKYO, Nov 25 (Reuters) – Japanese government bond (JGB) prices were little changed on Wednesday, with the market stuck between negative pressure stemming from improving risk sentiment and an upward pull from a 40-year auction.

Benchmark 10-year JGB futures rose 0.02 point to 152.14, with a trading volume of 18,078 lots, while the 10-year JGB yield lost half a basis point to 0.015%.

Yields on the shorter end of the curve stood flat, with two-year and five-year JGBs at minus 0.150% and minus 0.115%, respectively.

The 20-year JGB yield was unchanged at 0.385%, while the 30-year JGB yield added half a basis point to 0.645%.

The 40-year JGB yield rose 1 basis point to 0.685%.

The appeal of safe-haven debts faded as investors shifted to riskier investments on coronavirus vaccine-related developments, along with the commencement of the U.S. President-elect Joe Biden’s transition process three weeks after the election.

Expectations of more fiscal spending also weighed on the market as Biden plans to nominate former Federal Reserve Chair Janet Yellen as Treasury secretary.

The bid-to-cover ratio, a gauge of demand, at Wednesday’s 500 billion yen 40-year JGB sale was 2.67, little changed from 2.65 at the previous auction in October.

Reporting by Tokyo markets team; editing by Uttaresh.V

Source: Reuters

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