Bloomberg News

Japan’s 10-Year Bonds Fall, Post Weekly Drop, Before Auction

September 30, 2011

Sept. 30 (Bloomberg) -- Japan’s bonds fell, posting the biggest weekly slump in a month, before the Ministry of Finance sells 2.2 trillion yen ($29 billion) of 10-year debt on Oct. 4.

Primary dealers, which are required to bid at government auctions, often reduce holdings of bonds in case prices decline before they can pass on the new securities to investors. The Nikkei 225 Stock Average closed little changed today and completed a 1.6 percent gain this week, limiting demand for the relative safety of government debt.

“There seems to be selling ahead of the auction next week,” said Makoto Noji, a senior debt and currency strategist at SMBC Nikko Securities Inc. in Tokyo., one of the 25 primary dealers. “Excessive pessimism has eased.”

The benchmark 10-year yield added two basis points to 1.02 percent as of 3:50 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 1.1 percent security due September 2021 lost 0.182 yen to 100.723 yen.

The yields have risen four basis points over the past five days, the biggest weekly advance since the period ended Aug. 26.

Ten-year bond futures for December delivery declined 0.25 to 142.23 at the 3 p.m. close of the Tokyo Stock Exchange.

--Editors: Nate Hosoda, Rocky Swift

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.


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