JGBs slip after tepid auction results sour bullish mood

TOKYO, Feb 26 (Reuters) – Japanese government bond prices dipped on Wednesday after a re-offering auction of long-dated bonds drew tepid demand as yields have fallen sharply this week on fears about the rapidly-spreading coronavirus.

Benchmark 10-year JGB futures fell 0.06 point to 153.42, with a trading volume of 25,155 lots, a session after they posted their biggest daily price gain since the Bank of Japan started the currency yield curve control policy in 2016.

The 10-year JGB yield rose 0.5 basis point to minus 0.100% after briefly touching a three-month low of minus 0.105% and the five-year yield rose 1 basis point to minus 0.205%.

The liquidity enhancing auction in which the Ministry of Finance sells additional amount of existing bonds with 15.5 to 39 years to maturity did not attract strong bids.

Bid-to-cover fell to 2.14 from 2.56 in the previous auction.

The results underscored lack of investor needs at current yield levels, which stood near their lowest levels in several months.

The 20-year JGB yield was flat at 0.205% after touching four-month low of 0.200% earlier, while the 30-year JGB yield fell 0.5 basis point to 0.325%, a five-month low. (Reporting by Tokyo Markets Team)

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