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JGBs inch up, BOJ's June purchase details awaited

May 30 Japanese government bonds inched up on Tuesday, although activity was thin as investors awaited details of the Bank of Japan's regular bond-purchasing operations for June.


The central bank will announce the details of its buying intentions in each zone on Wednesday.


"We expect no change to each tenor, simply because the yield curve hasn't changed much," said Naomi Muguruma, senior fixed-income strategist, Mitsubishi UFJ Morgan Stanley Securities.


"Because the BOJ has reduced its purchases in the last couple of months, the shorter end of the curve is less negative than before," she said.


The 10-year cash JGB yield was flat at 0.035 percent, while 10-year JGB futures added 0.06 points to 150.75.


The Ministry of Finance auctioned 2.2 trillion yen ($19.85 billion) of two-year JGBs with a 0.1 percent coupon on Tuesday. About 57.7115 percent of the bids were accepted at the lowest price of 100.520. The sale drew bids of a robust 5.06 times the amount offered, though that was still below the previous sale's bid-to-cover ratio of 5.51 times.


The two-year yield rose half a basis point to minus 0.165 percent.


But prices slightly firmed in the superlong zone, with the 20-year JGB yield and the 30-year JGB yield shedding half a basis point to 0.555 percent and 0.795 percent respectively.


The market shrugged off data released early in the session, which showed that labour demand in Japan rose to its strongest in more than 40 years in April. The unemployment rate also held steady at a two-decade low last month, offering hope that a tight labour market will eventually spark a turnaround in weak consumer spending and inflation.

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