Japan's super-long bonds little changed ahead of auction

By Junko Fujita

TOKYO, July 9 (Reuters) - Japan's super-long government bonds were little changed on Wednesday as investors refrained from active trade ahead of a carefully watched 20-year bond auction in the next session.

The 20-year JGB yield JP20YTN=JBTC fell 0.5 basis point (bp) to 2.495%.

The 30-year JGB yield JP30YTN=JBTC fell 1 basis point to 3.050%.

Yields move inversely to bond prices.

"The market was cautiously awaiting the 20-year bond auction and tried not to make active bets," said Gen Taniguchi, market analyst at Mizuho Securities.

The 20- and 30-year JGB yields rose sharply this week amid expectations that the Liberal Democratic Party and junior partner Komeito, which form the ruling coalition, could risk losing their majority in the July 20 upper house election.

The potential defeat of the coalition could give power to opposition parties who have pledged in their campaign platforms to cut or abolish the sales tax.

The Ministry of Finance this month trimmed issuance of those bonds in response to record-high yields on those bonds scaled in May.

But the market now weighs the election outcome that could lead to the fiscal expansion more than the reduction in bond issuance, Taniguchi said.

Last week's auction of 30-year bonds, the ministry's first auction of super-long debt under a reduced-issuance scheme, saw a weak demand.

The 10-year JGB yield JP10YTN=JBTC rose 1 bp to 1.495%. The five-year yield JP5YTN=JBTC rose 1.5 bps to 1.02%.

The two-year JGB yield JP2YTN=JBTC rose 1.5 bps to 0.745%.

The 40-year JGB yield JP40YTN=JBTC fell 1.5 bps to 3.35%.