JGBs rise after U.S. employment data (Reuters) (11-01-2011)

TOKYO - Japanese government bonds had gains on Tuesday after a weaker-than-expected U.S. employment data released late last week, with the yield curve steepening slightly as superlongs lagged ahead of an upcoming 30-year sale.

March 10-year JGB futures were up 0.31 point at 140.02 after going as low as 139.53 late last week while the 10-year yield fell 1 basis point to 1.185 percent and the 30-year yield dipped 0.5 basis point to 2.085 percent, widening the 10-year/30-year yield spread by 1 basis point to 90 basis points.

The 30-year yield climbed 10 basis points last week with dealers and investors selling superlongs to make room for Thursday's 30-year sale and a 20-year offering on Jan. 20.

The Bank of Japan recently increased liquidity in the money market, pushing that way up the current account balance to an average of about 20 trillion yen ($241 billion) in December, the highest since 2006. It eased monetary policy in early October but some had said money market rates remained elevated due to an initially tepid increase in the current account balance.

Japanese financial markets stayed shut on Monday for a national holiday and reacted for the first time to the closely watched U.S. employment data released on Friday, showing U.S. employers added fewer jobs than anticipated in December.

JGBs reacted a little to comments by Finance Minister Yoshihiko Noda on Tuesday that Japan tends to purchase euro zone bonds to help bolster confidence in the European Financial Stability Facility (EFSF).

Source: Reuters