TOKYO (Thomson Financial) - Japanese government bond prices ended Tuesday's morning session narrowly mixed, as many investors remained on the sidelines amid an absence of strong new cues.
Neither yesterday's June quarter Tankan survey results nor comments from Bank of Japan board member Kiyohiko Nishimura -- who reiterated Monday the need for gradual adjustments to interest rates in line with the recovering economy -- excited market participants.
"A strong consensus has already been built (and factored in to the market) that the BOJ will raise interest rates in August. Trading will probably stay rangebound until any sign of further moves by the central bank (on its rate intentions) emerges," said Akitsugu Bando, strategist at Okasan Securities.
The medium-term bonds edged higher on expectations off solid demand for the new 10-year government bond being auctioned this morning. The broader market though remained under pressure, as technical buying by index funds at the end of the month has now run out of steam
The 1.9 pct coupon set for today's auction of 10 year paper prompted some market players to buy back 10-year bonds in the secondary market, as investors had recently sold off the paper amid talk that the new issue would carry a 1.8 pct coupon and fail to draw demand.
At the lunch break, the yield on the benchmark 10-year bond had slipped to 1.860 percent from 1.885 percent at the close yesterday.
The yield on the lead two-year note meanwhile inched up to 1.035 percent from 1.030 percent while the yield on the five-year note slipped to 1.480 percent from 1.485 percent.
The yield on the 20-year bond rose to 2.255 percent from 2.245 percent. The 30-year bond ended the session without any transactions completed.
Bond prices move inversely to yields.
The price of the September futures contract for 10-year bonds gained to 131.98 yen from 131.90 yen yesterday.
(1 usd = 122.24 yen)
yumiko.nishitani@thomson.com
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