* Short-term investors cut trim in futures after US jobs data
* Dealers’ position squaring for 10-yr sale weigh on long-end
* Demand from lifers, pension funds support superlongs
By Shinichi Saoshiro
TOKYO, April 5 (Reuters) – Japanese government bond futures fell on Monday after upbeat U.S. employment data released the previous week took the benchmark U.S. Treasury note yield to a 9-½ month high, dampening the appeal of debt.
Selling of long-dated debt by dealers making room on their books ahead of a 10-year sale the next day and a rise in Tokyo’s Nikkei stock average .N225 to an 18-month peak also pushed bond yields higher.
“The market retraced some of the steep gains made last week on solid new fiscal year demand for long-end and superlong bonds, which in turn had helped drive futures higher,” said Makoto Yamashita, chief Japan interest rate strategist at Deutsche Securities.
June 10-year futures 2JGBv1 lost 0.27 point to 138.43 as short-term investors cut positions after the contracts rose nearly half a point over the previous two trading days.
The benchmark U.S. 10-year note yield US10YT=RR climbed as high as 3.95 percent on Friday, its highest since June 11, as data showed 162,000 jobs were created in March, the strongest growth in three years. [US/] [ID:nN01126422]
Yamashita at Deusche Securities said participants are unsure about driving the market further down before seeing how the European financial markets, which were closed on Friday for a holiday, react to the U.S. jobs data.
The JGB yield curve flattened as the superlong maturities stood little changed thanks to continuing interest from investors like domestic pension funds and life insurers allocating their funds for the new fiscal year which began on April 1, market players said.
The benchmark 10-year yield JP10YTN=JBTC rose 3 basis points to 1.385 percent, edging back towards a 4-½ month high of 1.400 percent touched the previous week.
The 30-year yield JP30YTN=JBTC inched up 0.5 basis point to 2.230 percent.
Japan’s Ministry of Finance will offer 2.2 trillion yen ($23.2 billion) of 10-year JGBs on Tuesday. The auction is being eyed as a litmus test of investor demand at the start of the domestic fiscal year which began on April 1.
The Nikkei hit a fresh 18-month high on Monday after the U.S. jobs data provided the strongest signal yet that the U.S. economic recovery is on a firm footing. [.T] (Editing by Joseph Radford)