JGBs succumb to stocks and fall; superlongs buck trend

* Superlongs buck downdraft, gain on bargain hunting

* 10-year/30-year yield spread tightest in 8 weeks

* 2-yr yield hits 8-mth high, excessive easing hopes unwound

* 2-yr sale draws sufficient, if not unspectacular demand

By Shinichi Saoshiro

TOKYO, Nov 25 (BestGrowthStock) – Japanese government bonds fell on
Thursday, with the benchmark yield touching a two-month high,
succumbing to a bounce in Tokyo stocks.

The yield curve beyond the 10-years continued to flatten as
the superlong maturities outperformed on bargain hunting by life
insurers and other investors.

“The curve is flattening on two main factors. One is investor
bargain hunting in superlongs after their yields rose high
enough,” said a fund manager at a domestic asset management firm.

“The other is the ongoing selling of 10-year maturities by
players such as banks, who had misread the market and bet on
long-end yields dropping much more on the Fed’s quantitative
easing.”

Data released by the Japan Securities Dealers Association
earlier this week showed that Japan’s big banks bought a net 2.1
trillion yen of long-term JGBs in October, the biggest amount on
records stretching back to 2004.

The 10-year/30-year yield spread tightened to an eight-week
low of 92.5 basis points, continuing its decline from a 2-