JGBs lose ground ahead of auctions (Reuters) (17-01-2011)

TOKYO - Japanese government bond prices fell on Monday on selling by dealers ahead of two auctions later in the week, sending yields on some maturities to one-month highs.

A sharp fall in Shanghai shares forced Japanese stocks to give up early gains. Bonds with maturities over 10 years underperformed their shorter-dated peers ahead of Thursday's1.1 trillion yen auction of 20-year bonds, tilting the yield curve to its steepest level in a month.

March 10-year JGB futures shed 0.17 point to 139.88 on hedge-selling ahead of Tuesday's five-year JGB auction. The March contract fell as low as 139.61, its lowest in a week.

Primary brokers sold futures and cash bonds ahead of Tuesday's auction of 2.4 trillion yen ($29 billion) of five-year bonds while the 30-year yield climbed 4.0 basis points to a one-month high of 2.195 percent. The 20-year bond yield rose 3.0 basis points to 2.040 percent after briefly hitting a one-month high of 2.050 percent.

The yield on 10-year cash bonds gained 1.5 basis point to 1.210 percent leading to the spread between 20- and 10-year yields up to 83 basis points, the highest level in about a month.

The five-year bond yield advanced to a one-month high of 0.515 percent before retreating to 0.505 percent in late trade, 2.0 basis points higher than Friday.

Source: Reuters