Long-dated JGBs ease, 10-year yield hits 2 1/2-month high

Credit: REUTERS/SHOHEI MIYANO

Japanese government bond prices eased on Monday, with the benchmark 10-year yield hitting two-and-a-half-month highs, extending their retreat since earlier this month on hopes of a Sino-U.S. trade deal and receding expectations of a Bank of Japan easing.

TOKYO, Oct 21 (Reuters) - Japanese government bond prices eased on Monday, with the benchmark 10-year yield hitting two-and-a-half-month highs, extending their retreat since earlier this month on hopes of a Sino-U.S. trade deal and receding expectations of a Bank of Japan easing.

Shorter maturities fared better after the BOJ's buying operation on Monday drew limited offers from traders, and after BOJ Governor Haruhiko Kuroda said he would "certainly" cut short term interest rates when easing is needed.

The 10-year JGB yield JP10YTN=JBTC rose 1.5 basis points to minus 0.140%, its highest since Aug. 1, and has risen nine basis points from Oct. 7 low of minus 0.230%.

The 20-year JGB yield JP20YTN=JBTC rose 2 basis points to 0.250% while the 30-year yield JP30YTN=JBTC rose 1 basis point to 0.410%, both nearing their highs for the month.

The five-year yield JP5YTN=JBTC fell 0.5 basis point, however, to minus 0.275%, after having risen to a five-week high of minus 0.265% earlier.

The BOJ kept the size of its bond purchases unchanged on Monday, buying 420 billion yen of 1-3 year JGBs, 340 billion yen of 3-5-year JGBs and 350 billion yen of 5-10 year JGBs.

Its buying of 3-5 year JGBs saw limited selling from the market, helping the maturities reverse earlier losses.

Benchmark 10-year JGB futures 2JGBv1 fell 0.16 point to 154.07.

(Reporting by Tokyo Markets Team; Editing by Shounak Dasgupta)

((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827))

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