JGBs soften after weak 10-year bond auction

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TOKYO, Oct 5 (Businesshala) – Japanese government bond prices eased demand after a 10-year bond auction on Tuesday, while markets showed a muted response to new Japanese Finance Minister Shinichi Suzuki’s comments about fiscal targets .

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The Finance Ministry’s 2.6 trillion yen ($23.4 billion) offer attracted limited bids, with the auction’s bid-to-cover ratio falling to 2.45 from 3.36 in the previous auction.

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Auction tails, or the difference between the minimum and average prices, rose to 0.03 points from 0.02 in the previous auction, another sign of weak demand.

“The results were poor. The yields may have been too low for market players to bid aggressively,” said a trader at a Japanese brokerage.

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The 10-year JGB yield rose 0.5 basis points to 0.050%, while the 20-year yield rose 1 basis point to 0.435%.

The 30-year JGB yield rose 1 basis point to 0.675%.

On the low end, the five-year yield also rose 0.5 basis points to minus 0.095%.

Benchmark 10-year JGB futures fell 0.08 points to 151.53, with trading volume of 27,313 lots.

Finance Minister Suzuki said the country’s target would be to bring its primary balance to surplus by the financial year 2025.

$1 = 111.18 yen Reporting by Tokyo Markets Team; Ramakrishnan M.

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