Japanese government bonds mixed ahead of Brexit vote, underpinned by 20-year sale

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Tokyo | Published: June 23, 2016 12:27:05 PM

Japanese government bonds were mixed on Thursday, with prices of longer maturities lifted by solid results of a 20-year auction.

Brexit voteIf the Brexit measure goes through, it could lead to Britain’s losing huge benefits of freely trading with Europe. (Reuters)

Japanese government bonds were mixed on Thursday, with prices of longer maturities lifted by solid results of a 20-year auction.

Trading was cautious as British voters prepared to cast their ballots later in the session in a closely divided referendum on whether to leave or remain in the European Union, with the latest polls suggesting it might opt to stay.

The Bank of Japan may need to ease monetary policy if the British referendum outcome were to trigger a market shock that could deal a severe blow to the economy, board member Takahide Kiuchi said on Thursday.

The benchmark 10-year JGB yield added half a basis point to minus 0.145 percent after earlier rising to a two-week high of minus 0.130 percent, while 10-year JGB futures edged down 0.03 point to end at 152.13.

The Ministry of Finance offered 1.1 trillion yen ($10.51 billion) of 20-year JGBs with a 0.20 percent coupon.

The notes sold at a lowest price of 99.50, and drew bids of 3.61 times the amount offered, above the previous sale’s bid-to-cover ratio of 3.36 times.

The tail between the average and lowest accepted prices matched that of last month’s offering at 0.15, indicating strong demand for the bonds.

The superlong zone was firm after the sale, with 20-year yield shedding 2 basis points to 0.175 percent, while the 30-year yield fell 4.5 basis points to 0.205 percent. ($1 = 104.6500 yen)

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