JGBs stay in tight ranges ahead of Federal Reserve, Bank of Japan this week

TOKYO: Japanese government bond prices were steady to slightly lower on Monday, staying in narrow ranges as investors awaited US and Japanese Central Bank meetings this week.

The 20-year JGBs initially advanced on short-covering by dealers, sending their yield down 0.5 basis point to 1.475 per cent, but turned softer on sporadic profit-taking by some players, traders and money managers said.

As widely expected, the Bank of Japan offered to buy 200 billion yen ($2.1 billion) in JGBs maturing in more than 10 years under its massive JGB-buying programme.

Money managers at domestic life insurers and pension funds were largely staying to the sidelines ahead of the Federal Reserve's meeting on Tuesday and Wednesday and the BOJ's meeting on Thursday to review its semiannual economic outlook.

One regional banker said he does not expect 10-year JGB yields to rise sharply in the foreseeable future. He believes that the BOJ has the depth to absorb most of selling in the secondary market in that zone.

At midday, the yield on the current five-year JGBs was unchanged from Friday at 0.205 per cent, while the 10-year yield rose 0.5 basis point to 0.615 per cent .

In the superlong zone, the 20-year yield was up 0.5 basis point at 1.485 per cent and the 30-year yield was flat at 1.625 per cent.

Lead December JGB futures moved in a narrow range between 144.81 and 144.89 before finishing the morning session up 0.02 point at 144.85. In the morning session, JGB futures moved mostly in tandem with cash JGBs.