The cash bond market closed higher inactive trade led by securities houses' speculative buying and
end-investor purchases of low coupon issues, triggered by
declines in short-term interest rates, dealers said.
    The yield on the 5.1 pct 89th bond of 1996 closed at the
low for the day of 3.905 pct against the 3.955 close yesterday,
and the 3.930 opening. The 5.3 pct 95th bond of 1997 finished
at 4.010 pct against 4.165 at yesterday's close and an opening
today of 4.100. Active dealing accounts of city and trust banks
heavily bought low coupon issues on the rate decline and in
expectation of a further fall, dealers said.
    The lingering bearish outlook for the dollar is sustaining
hopes of another drop in Japanese rates, regardless of what
emerges from the expected meeting tomorrow of the G-7 meeting.
    The key U.S. 7-1/2 pct Treasury bond due 2016 was 95.26-28
in late Tokyo trade against the 96.04-06 New York finish.
    In the absence of retail participation, the key bond eased
on dealer position adjustments on the dollar's renewed weakness
ahead of the expected meeting.
    However, some bankers said Japanese investors would return
to the market, due to a wider Japan/U.S. Yield gap and demand
for liquidity, but only if the dollar stabilizes.
 REUTER
