A four-month fall down was getting into Japan’s 10-year yields after commodities fell and local stocks extended slump in the US shares.
Demand for bonds was given support right after the US Treasuries gained on increased demands for the $24 billion auction. 2.2 million yen, equal to $ 27 billion, will be sold by Japan’s Ministry of Finance because of 10-year debt. The coupon for the new securities would be announced at 10:30 am in Tokyo.
Strategist Ayako Sera from Tokyo in Sumitomo Trust & Banking Co. said, “A risk-averse mood is dominant in the markets, as you see in the sharp decline in U.S. yields and stock losses, giving some support to Japanese bonds. A reasonable result is expected at today’s auction.”
At Japan Bond Trading Co., the 10-year yield slipped half a basis point to 1.120 percent. The 1.3 percent security rose to 0.045 yen to 101.595 yen.
The Nikkei 225 stock Average went down as much as 3 percent after the Standard & Poor’s 500 Index went to 1.1 percent.
The previous sale of Japan of 10-year bonds attracted bids for 3.97 times the amount on offer, as judged against an average of 3.18 for the previous 10 auctions.
“After such a strong auction in April we would normally see some retracement in demand anyway,” Christian Carrillo, head of Asia-Pacific yesterday. “If we also add the possibility of a lower-coupon bond being offered by MOF, we doubt that investors would be aggressively buying.”
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