Japanese government bonds end morning flat to lower ahead of U.S. jobs data

Thu, Apr 3 2008, 03:34 GMT
http://www.afxnews.com

TOKYO (Thomson Financial) - Japanese government bond prices ended Thursday morning flat to lower in a quiet trade as investors waited for fresh leads such as an auction of 10-year inflation-indexed bonds today and the U.S. jobs report on Friday.

The market initially faced selling pressure, mirroring the U.S. Treasury market overnight after an unexpected gain in payroll services firm ADP's national employment report for March.

U.S. bond prices were also weighed down as investors interpreted testimony by Federal Reserve Chairman Ben Bernanke as saying that the central bank might be less aggressive about cutting rates.

"After the bond selling at the outset, investors soon took a breather after the recent volatility," said Naomi Hasegawa, a senior strategist at Mitsubishi UFJ Securities.

"If the jobs report comes in better-than-expected, as did the ADP report, the market is seen to reduce its expectations for an interest rate cut by the Fed at its next policy meeting, which would be a negative for the market," Hasegawa said.

Investors were also waiting for the results from an auction early this afternoon. The finance ministry is auctioning 500 billion yen ($4.9 billion) worth of 10-year inflation-indexed bonds with the market expecting a 1.3 percent coupon, higher than a 1.2 percent coupon at last month's auction.

The Japanese stock market moved in a narrow range in morning trade after the Nikkei 225 index jumped over 4 percent on Wednesday. The index ended the morning up 0.1 percent at 13,200.71.

At midday, the yield on the benchmark 10-year bond was steady at 1.375 percent.

The yield on the two-year note was also flat at 0.585 percent, while the yield on the five-year note edged up to 0.830 percent from 0.825 percent.

The yield on the 20-year bond rose to 2.105 percent from 2.085 percent, while the yield on the 30-year bond advanced to 2.410 percent from at 2.390 percent.

Bond prices move inversely to yields.

The price of the June futures contract for the 10-year bond was down at 139.45 yen from 139.55 yen late on Wednesday.

($1 = 102.48 yen)