JGBs edge down as market awaits BOJ decision

[TOKYO] Japanese government bond prices eased on Wednesday in thin trade as most investors stayed on the sidelines awaiting the outcome of the Bank of Japan's policy meeting.

The BOJ is expected to cut its core consumer inflation forecast for next fiscal year to below 1.5 per cent from 1.7 per cent projected in October, sources familiar with the bank's thinking said.

It was seen maintaining its current asset buying programme, though a surprise increase could not be ruled out.

The central bank did not offer to buy JGBs under its asset purchase programme on Wednesday morning, as it typically refrains on days it concludes its policy board meetings.

The 20-year tenor underperformed the rest of the curve ahead of Thursday's monthly 1.2 trillion yen (US$10.15 billion) 20-year JGB auction to re-open the current issue number 151.

At midday, the yield on the 5-year JGB, which dipped into negative territory for the first time ever on Tuesday, was up 0.5 basis point on the day at 0.005 percent.

The 10-year yield also added 0.5 basis point to 0.220 per cent, after fluctuating in a narrow 0.215 per cent to 0.225 per cent range.

In the superlong zone, the 20-year yield rose 1 basis point to 0.875 per cent, oscillating in a narrow 0.870 per cent to 0.880 per cent range, ahead of Thursday's sale.

Lead 10-yr March JGB futures moved in a range between 148.41 and 148.55 before finishing at midday up 0.01 point at 148.48.

REUTERS