Japans Notes May Fall as Traders Likely to Sell Before Auction
Published April 11th, 2007
Japan’s five-year notes may fall for a third day on speculation traders will sell the debt to guard against a rise in yields at a government auction tomorrow.
Higher yields will increase the likelihood the Ministry of Finance will raise the coupon on the five-year securities to 1.3 percent, the most in three months. Bank of Japan Governor Toshihiko Fukui yesterday said the U.S. economy, Japan’s biggest export destination, will achieve a “soft landing.”
“There should be some adjustments ahead of the auction, weighing on five-year notes,” said Akihiko Inoue, market analyst in Tokyo at Mizuho Investors Securities Co., one of the 25 primary dealers that are required to bid at government auctions.
Ten-year bond futures for June delivery rose to 133.88 on the London International Financial Futures Exchange from 133.81 at the 3 p.m. close in Tokyo yesterday. The contract will open for trading at 9 a.m. Tokyo time.
The benchmark five-year note hasn’t traded yet today at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The yield on the 1.2 percent note due in March 2012 rose half a basis point to 1.225 percent yesterday.
Five-year yields on April 9 climbed to 1.235 percent, the highest since Feb. 22. A basis point is 0.01 percentage point.
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