BLBG: Japan's Bonds Drop for a Third Day After 10-Year Auction, as Stocks Gain
Japan’s bonds fell for a third day as shares around the world climbed and oil prices declined after Saudi Arabia offered to make up for petroleum supplies lost because of unrest in Libya.
Benchmark 10-year yields rose to a one-week high as today’s auction of the securities drew less demand than traders expected. Bonds also fell after data showed Japanese payrolls increased in January and as the yen retreated from near a three- week high against the dollar.
“The global economy continues to improve, and this optimism is overcoming concerns about lingering conflicts in the Middle East,” said Shinji Nomura, chief debt strategist at Nikko Cordial Securities Inc. in Tokyo. “You can’t say the auction was good, reflecting the market’s sentiment.”
The benchmark 10-year yield gained 1.5 basis points to 1.270 percent as of 3:18 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. That’s the highest level since Feb. 22. A basis point is 0.01 percentage point. The 1.2 percent security maturing in December 2020 fell 0.13 yen to 99.39 yen.
Ten-year bond futures for March delivery declined 0.19 to 139.35 at the 3 p.m. close of the Tokyo Stock Exchange.
The Nikkei 225 Stock Average advanced 1.2 percent and the MSCI Asia Pacific Index of regional shares climbed 0.9 percent.
Oil, Stocks
Saudi Arabian Oil Co. Chief Executive Officer Khalid Al- Falih said yesterday the kingdom is ready to cover a shortfall in crude supply, without specifying how much the company would provide.
Crude oil for April delivery declined to $96.97 a barrel on the New York Mercantile Exchange yesterday, the biggest daily drop since Feb. 11. The MSCI World Index rose 0.8 percent.
The lowest price at the 10-year auction was 99.82 yen, less than 99.89 yen predicted by 13 traders in a Bloomberg News survey.
The lowest price was 0.09 yen below the average, up from a difference of 0.06 yen at the previous sale on Feb. 1. The so- called tail is the difference between the two levels. The longer the tail, fewer bids are clustered around the average price.
“The auction result was a little bit weak,” said RuiXue Xu, strategist in Tokyo at RBS Securities Japan Ltd., a unit of Royal Bank of Scotland Plc. “Higher stock prices and a weaker yen are creating negative conditions for debt.”
The yen declined 0.4 percent against the dollar to 82.21, after touching 81.62 yen yesterday, the strongest since Feb. 4.
A weaker yen boosts the value of overseas income at Japanese companies when converted into their home currency.
To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net.
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.
