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JGBs futures prices

depict higher trend

TOKYO: Japanese government bond (JGB) and futures prices drifted higher in late afternoon Tokyo trade, with dealers' buying back pushing the key September bond futures up, dealers said.

"Those who had sold the key September futures bought them back before the key status shifts to the next (December) contract," a commercial bank dealer said.

But trading volume remained sparse throughout the day, with many participants waiting to see how large investors' appetite for long bonds at Tuesday's auction will be, they said.

The key September contract ended 0.39 higher at 119.14.

Turnover was 48,956 contracts. The futures briefly climbed to 119.20. The day's low was 118.40.

The coupon on the 20-year bonds to be auctioned on Tuesday is expected to be 3.6 or 3.7 percent, dealers said.

The auction could produce fairly good results if the coupon is set at these levels, but the results of the US Treasury refunding might affect the yen bond auction, traders said.

The Treasury Department said it will sell a record $18.0 billion on three-year notes on Tuesday, $13.0 billion of 10-year notes on Wednesday and $11.50 billion of 30-year bonds on Thursday.

Dealers said they wanted to see if life insurers, major institutional investors in Japan, will really start to buy US Treasuries after Japan's Finance Ministry announced abroad.

"If they (investors) don't buy the Treasuries very much, their appetite for yen bonds might remain strong," said a securities house dealer.

Dealers said whether yen bond prices try for higher levels might hinge on the results of the 20-year bond auction.

Investors' buying orders for cash bonds were not seen today except for sporadic buying in the morning.

A lack of active movements in the bond market today was partly because trading is becoming dull, with participants entering summer holidays, said the securities house dealer.

The yield of the bellwether 174th 10-year bond stood at 2.970 percent at 0721 GMT, against its 3.005 percent close on Friday. It ranged between 2.965 and 3.055 percent.-Reuter