JGB futures up on short covering, Nikkei limits rise

* JGBs rise after Fed meeting ends without big surprise

* Curve steepening limited by bargaining hunting in

* Nikkei’s 2.2 pct surge curbs JGB gains

By Shinichi Saoshiro

TOKYO, Nov 4 (BestGrowthStock) – Japanese government bond futures
rose on Thursday as short positions were covered after a
closely-watched Federal Reserve meeting the previous day ended
without major surprises, although gains were capped by a jump in
Tokyo stocks.

December 10-year futures (2JGBv1: ) gained 0.21 point to
143.24 after the Fed’s decision, announced on Wednesday, to buy
another $600 billion of Treasuries by the end of the second
quarter of 2011 did not veer too widely from the $500 billion
many had anticipated.

Expectations according to a Reuters poll of economists prior
to the meeting had ranged widely from $250 billion to as high as
$2 trillion.

“JGBs were bought on relief after the Fed meeting did not
come with a huge surprise,” said Shinji Nomura, chief fixed
income strategist at Nikko Cordial Securities.

“The market was already on a relatively firm footing after
Tuesday’s 10-year auction confirmed investor bargain hunting
demand in the upper half of 0.900 percent.”

The yield curve steepened a touch as superlongs lagged other
maturities, taking cues from a steepening in the U.S. Treasury
curve the previous day.

But bargain hunting from investors such as life insurers
limited the steepening, while curve players could be enticed to
begin placing flatteners with the widening of spreads seemingly
peaking, market players said.

The 10-year/20-year yield spread widened by 0.5 basis point
to 87 basis points but kept away from a 2-