JGBs resume fall, market braces for 20-year sale

TOKYO, Dec 13 (BestGrowthStock) – Japanese government bonds slipped
on Monday, resuming their recent fall after a sharp bounce the
previous session as the market braced for an upcoming 20-year
sale and took its cues from a renewed slide in U.S. Treasuries.

* Japan will sell 1.1 trillion yen ($13 billion) of 20-year
JGBs on Tuesday, the last long-dated bond auction of the year.
The passage of the auction will lessen near-term supply concerns
and may help the market better weather the turbulence in
Treasuries, market players say.

* The market has been eyeing the recent tumble in Treasuries
warily as it has prompted investors with foreign bond holdings,
such as domestic banks, to sell JGBs to cover their losses.

* On the domestic front, some of the focus this week will be
on the government’s draft budget process and whether it can keep
new JGB issuance for the next fiscal year at or below its target
of 44 trillion yen.

* Conflict in the ruling Democratic Party of Japan over a
funding scandal involving a party powerbroker could delay draft
budget decisions and dampen market sentiment by increasing
uncertainty surrounding the process.

* The Bank of Japan’s closely watched December tankan survey
due on Wednesday, on the other hand, could provide a respite for
JGBs. The survey is likely to show confidence at Japanese firms
fell for the first time in seven quarters as the strong yen and
an overseas slowdown muddy the outlook for Japan’s economy.

* The benchmark 10-year yield (JP10YTN=JBTC: ) climbed 3.5
basis points to 1.230 percent after dropping about 8 basis points
on Friday.

* March 10-year futures (2JGBv1: ) were down 0.39 point at
139.32 after slipping as low as 139.17.

* Treasuries fell on Friday to cap off a week of very
aggressive selling, with a brief bounce the previous day
overwhelmed by better-than-expected data. [ID:nN10596701]
($1=83.97 Yen)
(Reporting by Shinichi Saoshiro; Editing by Edmund Klamann)

JGBs resume fall, market braces for 20-year sale