JGBs drop on wariness towards 10-year auction

* Key upcoming events seen curbing demand for new 10-yr JGBs

* MOF reopens 1 pct coupon 10-year issues sold in September

* 10-year yield climbs to five-week high

By Shinichi Saoshiro

TOKYO, Nov 2 (BestGrowthStock) – Japanese government bonds dropped on
Tuesday on wariness that a 10-year debt sale may draw subdued
demand with investors staying on the sidelines ahead of key
events this week.

Japan’s Ministry of Finance offered 2.2 trillion yen ($27.3
billion) of 10-year JGBs on Tuesday, with auction results due at
0345 GMT.

Market watchers say demand for the new 10-year paper could be
curbed by caution ahead of events including a Federal Reserve
meeting starting on Tuesday and a Bank of Japan policy meet later
this week.

“The timing doesn’t favour the auction, with so many
closely-watched events due to take place soon after the
offering,” said Katsutoshi Inadome, a fixed-income strategist at
Mitsubishi UFJ Morgan Stanley Securities.

“The 10 years are also expensive relative to surrounding
maturities, and this could dampen demand.”

The 10-year/20-year yield spread hit a 2-