TOKYO, Feb 13: Japanese government bond prices slid on Friday after a lacklustre debt auction hit market sentiment already jittery after a recent rise in volatility. The 10-year JGB yield rose as high as 0.435 percent, its highest since Dec. 9. The yield has climbed steadily since hitting a record low 0.195 percent late January. The Bank of Japan has absorbed large amounts of JGBs for its extensive monetary easing scheme, which has helped reduce liquidity but driven up volatility in the process. The bid-to-cover ratio, a gauge of demand, at Friday’s 2.7 trillion yen ($22.75 billion) five-year JGB auction fell to 3.29 from 4.38 at the previous sale in January. Investors will have to buy JGBs at some time with large debt redemptions looming in March and as they start preparing for investments in the new financial year starting in April, said Makoto Yamashita, chief rates strategist at Deutsche Securities in Tokyo.
‘But there are overseas factors like the euro zone finance ministers’ meeting on Monday and Federal Reserve Chair (Janet) Yellen’s congressional testimony on Feb. 24. Investors are likely holding off until these potentially volatile events are through,’ he said.
The weak five-year sale fanned caution towards Tuesday’s 20-year auction. The 20-year yield rose to a three-month peak of 1.255 percent.
March 10-year JGB futures shed 0.17 point to 146.97. (AGENCIES)
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