JGBs supported, superlongs outperform on half-year-end bids

TOKYO, Sept 25: Japanese government bond prices were supported on Tuesday following soft German business sentiment data, with longest maturities outperforming on buying by Japanese investors ahead of half-year book-closing at the end of the month.

The 10-year JGB futures were up 0.01 point at 143.95. That level reflected a 50 percent retracement of its July-August decline, which was driven primarily by unwinding of safe-haven buying due to concerns about the European debt  crisis.

The 144 mark in the futures is seen as a major resistance for now. Above that, another resistance is seen at 144.12, the 61.8 percent retracement of the same decline.

The 10-year cash bond yield stood flat at 0.790 percent , matching a three-week low hit on Monday.

Longer maturities, such as 20- and 30-year bonds, fared better as they attracted bids from Japanese investors such as life insurers ahead of the last day of their financial half year on Sept. 30.

‘For those investors who haven’t bought much this half-year, the longer maturities look the most attractive given the hefty spreads’ over shorter maturities, said a fund manager at a Japanese asset management firm.

The yield spread between 10- and 30-year bonds widened
To a four-year high of 114 basis points last Thursday and stood at a still hefty 111 basis points. That compared with 94 basis points at the start of this financial year in April.

The 30-year bond yield fell 1.0 basis point to 1.900 percent while the 20-year yield fell 0.5 basis point to 1.650 percent.


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