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Japanese government bonds end morning

Wednesday, January 16, 2008

TOKYO (Thomson Financial) - Japanese government bond prices ended Thursday morning mostly weaker as lower US Treasury prices and a rebound in Tokyo stocks prompted investors to unload some of the holdings they built up recently amid fears of a US-led economic slowdown.

Overnight the yield on the benchmark 10-year US Treasury note rose to 3.71 percent from 3.68 percent. This morning the Nikkei 225 Stock Average gained 1.1 percent, after losing 7.5 percent over the last four sessions.

"Market players were inclined to unwind positions in the wake of continuous rallies recently, while they also sought to their lighten holdings ahead of the auction of a 30-year bonds," said Katsutoshi Inadome, strategist at Mitsubishi UFJ Securities.

The Ministry of Finance is scheduled to auction on Friday morning 30-year government bonds which market players expect to carry a 2.5 percent coupon.

Even so, bond prices remained well supported as weaker US stocks overnight and the Nikkei's top-heaviness Thursday morning kept investor appetite for fixed income instruments relatively firm.

"Investors have become used to benchmark 10-year bond yields as low as below 1.4 percent and 5-year bond yields below 0.9 percent. And, given the last-minute appetite for investment returns ahead of the fiscal yearend in March, I expect bond prices to remain firmly supported in the near term," Inadome said.

At the break, the the yield on the benchmark 10-year bond was at 1.395 percent, up from 1.380 percent at the close Wednesday.

The yield on the two-year note slipped to 0.575 percent from 0.585 percent, while the yield on the five-year debt was flat at 0.860 percent.

The yield on the 20-year bond rose to 2.050 percent from 2.035 percent and the yield on the 30-year bond edged up to 2.320 percent from 2.300 percent.

Bond prices move inversely to yields.

The price of the March futures contract for the 10-year bond dipped to 138.11 yen from 138.21 yen late Wednesday.

(1 US dollar = 107.06 yen)

Posted by MOHAMED SAID at 9:38 PM  


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