Halister News

(Bloomberg) -- Japan’s sovereign bond curve steepens, led by super-long end. BOJ’s bond purchase program for June, which was announced on May 31, is negative for super-long tenors given the amounts for 10y-25y tenor and 25y+ tenor decreased by 20b yen from May.

• Click here for weekly change in yield curve and here for market snapshot
• Ministry of Finance to sell 30-year govt bonds on June 7, and 5-year govt bonds on June 9
• Nation’s final reading of 1Q GDP on June 8 to be released on June 8; est. 0.5% q/q vs 0.4% preliminary reading; economists sees final figure may be revised up due to stronger-than-expected 1Q capital spending
• BOJ said it will buy fewer bonds with residual maturity of more than 10 yrs and up to 25 years; will purchase 220b yen in June, down from 240b yen in May; BOJ also to cut purchase size for tenors over 25 years to 140b yen from 160b yen
• Prime Minister Abe announced on June 1 a delay to sales tax hike and promised bold economic steps in the autumn
  • S&P Global Ratings raised its real GDP growth forecast for Japan in 2017 to 1.0% from 0.4% earlier on delayed tax hike
  • Moody’s Investors Service says Japan’s sales tax delay is credit negative as it raises further questions over the government’s ability and willingness to meet its stated fiscal consolidation goals
  • Fitch awaits more details on revised fiscal plans before decision on Japan’s rating
• Govt’s sale of 2-year bonds on May 31 drew strongest demand since Dec. 2014; sale of 10-year bonds on June 2 drew strongest demand since August 2014

• WHAT THEY SAY

• DIAM (Nobuto Yamazaki, executive fund manager)
  • Market cautious about a weak result for 30-year bond auction as current market rate is too low
  • 30-year yield may trade 0.29-0.39% range as auction may trigger volatility

• JPMorgan Asset Management (Genji Tsukatani, fund manager)
  • Unless yields fall ahead of auction, 30-year and 5-year bonds auctions could go smoothly as market is getting used to low rates

• Okasan Securities (Makoto Suzuki, senior bond strategist)
  • Market participants and investors unlikely to trade ahead of June FOMC and BOJ meetings
  • 5-year and 30-year bond auction may go smoothly as investors could buy on dips on back of large bond redemptions this month

• NOTE: JGBs worth about 18t yen ($165b) will mature this month (excluding T-bills, linkers and floating bond), with large proportion June 20, according to data compiled by Bloomberg