Long-dated JGBs drop ahead of a next week auction (Reuters) (03-03-2011)

TOKYO - Long-dated Japanese government bonds fell on Thursday led by investors selling the maturities ahead of an auction next week, though medium-term paper and futures were supported by short-covering.

March 10-year futures were down 0.16 point at 139.54, after rising as high as 139.76.

In cash bonds, selling was seen in superlongs, bonds with maturities over 10 years, as players made room ahead of a 30-year bond auction next Tuesday, while short-covering was seen in medium-dated bonds and futures

The benchmark 10-year yield was up 2.5 basis points at 1.290 percent, though off a 10-month high of 1.350 percent struck last month. The 20-year yield climbed 3 basis points to 2.040 percent.

The 30-year yield rose 4 basis points at 2.205 percent, while the 5-year yield was unchanged at 0.525 percent.

The yield curve steepened as the 5-year/10-year yield spread widened to around 76 basis points, the highest since early December.

The 5-year/20-year yield spread also widened to around 151 basis points, the highest since mid-January.

Foreign investors bought a net 862.1 billion yen ($10.5 billion) of JGBs last week, the highest level in about five months, according to capital flows data from Japan's Ministry of Finance on Thursday.

Source: Reuters