JGBs slip as reviving risk appetite lifts Nikkei

* JGB futures pull back from 1-mth high as Nikkei surges

* Retreat softens recently bullish superlongs before sale

* Sale seen drawing demand from curve players, dealers

By Shinichi Saoshiro

TOKYO, April 21 (BestGrowthStock) – Japanese government bonds slipped
on Wednesday, with futures falling further from a one-month peak
hit earlier this week as investors’ appetite for risk revived
further.

The move drew demand away from safe-haven debt and back
towards assets such as stocks, lifting Tokyo’s Nikkei average 1.7
percent. [.T]

“JGBs fell as stocks recovered on expectations that the
impact from the charge against Goldman Sachs would fade,” said a
fund manager at a domestic investment firm.

“But JGB losses were limited by flight-to-quality demand
stemming from worries over Greece’s ability to repay its large
debts.”

Yields of longer-dated JGB maturities also rose as dealers
sold to make room on their books for a 1.1 trillion yen ($11.8
billion) 20-year debt sale on Thursday.

Wednesday’s JGB retreat may bring prices down to slightly
more attractive levels for investors ahead of the 20-year
auction. The 20-year yield fell below 2.100 percent this week for
the first time since December and there is concern that some bond
buyers may lose interest at such low yield levels.

“The 20-year yield has fallen to around 2.100 percent and
investor demand is not very strong at this level,” said Takafumi
Yamawaki, a senior rates strategist at BNP Paribas Securities.

Only a few participants see the 20-year yield declining much
further and some investors may wait until yields on the new paper
rise to more attractive levels, Yamawaki said.

Market players said demand for the new 20-years may come from
yield curve players expecting the curve to flatten again
following the recent steepening and dealers wanting to cover
short positions.

The 10-year/20-year yield spread stood at 77 basis points on
Wednesday, pulling back from a five-month low of 71.5 basis
points touched early in April.

JGBs took their early cue from U.S. Treasuries, which saw
shorter-dated notes fall for a second day with strong corporate
earnings stalling safe-haven buying. [US/]

Bonds were also hurt by the Nikkei average’s (.N225: ) surge.
Tech shares were buoyed by stronger results than expected from
Apple Inc (Read more about Apple stock future.) (AAPL.O: ), helping the Nikkei pare losses suffered on
concern over fallout from the fraud charges against Goldman Sachs
(GS.N: ).[.T][.N]

Concerns have eased slightly over the impact of the Goldman
suit and the flight disruptions caused by ash from Iceland’s
volcano, allowing the focus to shift towards solid corporate
earnings. [ID:nN16131161][ID:nLDE63J2L9]

June 10-year JGB futures fell 0.12 point to 139.13 (2JGBv1: )
after hitting a one-month high of 139.36 on Monday.

The 20-year yield rose 1 basis point to 2.105 percent
(JP20YTN=JBTC: ), pulling back from a four-month low of 2.085
percent touched on Monday.

The benchmark 10-year yield rose 1.5 basis points to 1.335
percent (JP10YTN=JBTC: ) after touching a one-month low of 1.305
percent on Monday.

The five-year yield climbed 0.5 basis point to 0.495 percent
(JP10YTN=JBTC: ).

Stock Market Report

($1=93.20 Yen)
(Editing by Michael Watson)

JGBs slip as reviving risk appetite lifts Nikkei