JGBs dip on Nikkei rally, lukewarm re-offer sale

* Nikkei jumps 2.9 pct to weigh on JGBs

* Superlongs sag, curve steepens after tepid re-offer sale

* Market focus seen shifting to debt supply plans

By Shinichi Saoshiro

TOKYO, Nov 5 (BestGrowthStock) – Japanese government bonds dipped on
Friday on a rally in Tokyo stocks, with superlongs
underperforming after tepid demand at a re-offer auction.

JGB yields inched higher across the board after the Nikkei
(.N225: ) surged 2.9 percent with investor appetite for risk
continuing after the Federal Reserve on Wednesday unveiled a plan
to boost the economy. [.T]

Subdued results at a 300 billion yen ($3.7 billion) JGB
re-offer sale also weighed on bonds. The bid-to-cover ratio, a
gauge of demand, at the Ministry of Finance’s re-offering of
20-year and 30-year bonds slipped to 2.56 from 3.15 at a similar
sale last month.

The MOF sells extra amounts of JGBs already in circulation at
such sales, which are also called liquidity-enhancing auctions.

“The auction shows that some of the main buyers of
superlongs, such as life insurers, are opting to wait until
yields climb higher before beginning their purchases,” said a
trader at a European brokerage.

“The market will now look to next week’s 40-year sale to
gauge how strong real money demand is for superlongs,” he said,
adding that the yield curve could continue to steepen until then.

December futures slipped 0.17 point to 143.11 (2JGBv1: ).

The benchmark 10-year yield (JP10YTN=JBTC: ) climbed 1 basis
point to 0.930 percent.

The 20-year yield (JP20YTN=JBTC: ) rose 3 basis points to 1.825
percent.

The 10-year/20-year yield spread widened to a 2-