JGBs edge up on U.S. coronavirus surge, upbeat five-year auction

TOKYO, Dec 8 (Reuters) – Japanese government bond prices edged up on Tuesday on rising U.S. coronavirus cases and firm results of a five-year JGB auction, with long-dated bond yields hitting their lowest levels in two weeks.

The market was focused on how much the government would increase its debt sales as Prime Minister Yoshihide Suga announced a $708 billion economic package to support recovery from the country’s coronavirus-driven economic slump.

Still, prices were underpinned by confidence that the Bank of Japan would step in to support the market if increased debt sales destabilise it.

Benchmark 10-year JGB futures rose 0.13 point to 152.10, their biggest gain in almost a month.

The 10-year JGB yield fell 0.5 basis point to 0.015%, while the 20-year yield fell 0.5 basis point to 0.380%.

The 30-year yield dropped 1 basis point to 0.635%, while the 40-year yield fell 1.5 basis points to 0.680%.

The two-year JGB yield was flat at minus 0.140%, while the five-year yield fell 0.5 basis point to minus 0.115%.

The auction of five-year JGBs attracted bids 3.96 times the offer of 2.5 trillion yen ($24 billion), up from 3.52 times in the previous auction last month.

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