By Shinichi Saoshiro
TOKYO, April 6 (Reuters) - Japanese government bonds slipped on Tuesday, pressured as market participants squared positions for a 10-year sale and after the U.S. benchmark Treasury note yield hit an 18-month high the previous day on growing economic optimism.
Japan's Ministry of Finance offered 2.2 trillion yen ($23.3 billion) of 10-year JGBs on Tuesday, reopening the 1.4 percent coupon issue of the maturity sold at the previous auction in March. The auction results will be released at 0345 GMT.
Dealers are eyeing the auction to see how much demand will emerge from domestic investors looking to allocate their new fiscal year funds amid bearish factors such as robust equities and the recent slide by U.S. Treasuries.
'Investors expected to show interest for the new 10-years are large domestic banks and regional banks,' said Shinji Nomura, chief fixed-income strategist at Nikko Cordial Securities.
But although there may demand from these investors at the auction, it remains to be seen whether they will provide the market with aggressive follow-through support, Nomura said.
'The banks are flush with cash and JGBs form the core part of their investments, but the receding threat of a double-dip recession as well as fiscal concerns may prevent them from chasing yields lower.'
June 10-year futures fell 0.19 point to 138.26, edging back toward a 4-½ month low of 138.01 touched in after-hours trade the previous week.
The benchmark 10-year JGB yield rose 2 basis points to 1.400 percent, matching a 4-½ month high hit the previous week.
A rise in superlong yields was limited by bargain hunting interest from pension funds and life insurers putting to work their funds for the new fiscal year, market players said.
The 20-year yield rose 1 basis point to 2.125 percent after hitting a 2-½ month low of 2.110 percent the previous day.
The 30-year yield rose 0.5 basis point to 2.230 percent after hitting a 3-½ month low of 2.220 percent the previous day.
The five-year/20-year yield spread steepened slightly to 158.5 basis points from a four-month low of 157.5 basis points reached the previous day.
The benchmark 10-year U.S. Treasury note yield climbed above 4 percent for the first time time since October 2008 on Monday after upbeat jobs data boosted prospects the economic recovery will quicken. (Editing by Edwina Gibbs)
((shinichi.saoshiro@thomsonreuters.com; Reuters Messaging: shinichi.saoshiro.reuters.com@reuters.net; +81-3-6441-1774)) ($1=94.35 Yen) Keywords: MARKETS JAPAN JGB (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
TOKYO, April 6 (Reuters) - Japanese government bonds slipped on Tuesday, pressured as market participants squared positions for a 10-year sale and after the U.S. benchmark Treasury note yield hit an 18-month high the previous day on growing economic optimism.
Japan's Ministry of Finance offered 2.2 trillion yen ($23.3 billion) of 10-year JGBs on Tuesday, reopening the 1.4 percent coupon issue of the maturity sold at the previous auction in March. The auction results will be released at 0345 GMT.
Dealers are eyeing the auction to see how much demand will emerge from domestic investors looking to allocate their new fiscal year funds amid bearish factors such as robust equities and the recent slide by U.S. Treasuries.
'Investors expected to show interest for the new 10-years are large domestic banks and regional banks,' said Shinji Nomura, chief fixed-income strategist at Nikko Cordial Securities.
But although there may demand from these investors at the auction, it remains to be seen whether they will provide the market with aggressive follow-through support, Nomura said.
'The banks are flush with cash and JGBs form the core part of their investments, but the receding threat of a double-dip recession as well as fiscal concerns may prevent them from chasing yields lower.'
June 10-year futures fell 0.19 point to 138.26, edging back toward a 4-½ month low of 138.01 touched in after-hours trade the previous week.
The benchmark 10-year JGB yield rose 2 basis points to 1.400 percent, matching a 4-½ month high hit the previous week.
A rise in superlong yields was limited by bargain hunting interest from pension funds and life insurers putting to work their funds for the new fiscal year, market players said.
The 20-year yield rose 1 basis point to 2.125 percent after hitting a 2-½ month low of 2.110 percent the previous day.
The 30-year yield rose 0.5 basis point to 2.230 percent after hitting a 3-½ month low of 2.220 percent the previous day.
The five-year/20-year yield spread steepened slightly to 158.5 basis points from a four-month low of 157.5 basis points reached the previous day.
The benchmark 10-year U.S. Treasury note yield climbed above 4 percent for the first time time since October 2008 on Monday after upbeat jobs data boosted prospects the economic recovery will quicken. (Editing by Edwina Gibbs)
((shinichi.saoshiro@thomsonreuters.com; Reuters Messaging: shinichi.saoshiro.reuters.com@reuters.net; +81-3-6441-1774)) ($1=94.35 Yen) Keywords: MARKETS JAPAN JGB (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.