Longer-dated JGBs firm after 20-year debt auction attracts demand

Longer-dated JGBs firm after 20-year debt auction attracts demand
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TOKYO, Oct 20 (Reuters) – Longer-dated Japanese government bond prices rose on Tuesday, with strong demand seen during the 20-year debt sale, powered by expectations of additional U.S. stimulus package and a coronavirus vaccine by the end of this year.

Benchmark 10-year JGB futures rose 0.05 point to 152.15, with a trading volume of 14,538 lots, while the 10-year JGB yield was flat at 0.020%.

The auction of 20-year JGBs attracted bids 3.86 times the offer of 1.2 trillion yen, up from bid-to-cover ratio of 3.69 at the auction in September.

In another sign of strong demand, the auction’s tail, the gap between lowest and average prices, narrowed to 0.05 from 0.1 in the previous sale.

The 20-year JGB yield fell 1 basis point to 0.390%.

The 30-year JGB yield fell 1.5 basis points to 0.605%, while the 40-year JGB yield lost 1 basis point to 0.635%.

At the shorter end of the market, the two-year JGB and the five-year yields were both flat at minus 0.145% and minus 0.115%, respectively.

U.S. House of Representatives Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin “continued to narrow their differences” in a telephone conversation about the fresh aid package, Pelosi’s spokesman wrote on Twitter.

Pelosi hopes that by the end of Tuesday there will be “clarity” on whether a coronavirus stimulus bill can be passed before the Nov. 3 presidential election, he said. (Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips)