"The trend of money flowing into the bond market is unlikely to change, as there haven't appeared any signs of a brighter economic outlook, which would boost stock market sentiment," said Citigroup Global Markets Japan senior strategist Maki Shimizu.
The benchmark 10-year cash JGB yield is likely to trade in a 1.03%-1.08% range next week, with some solid demand expected at the yield above 1.05%, Shimizu added.
The 10-year yield dropped 2.0 basis points to 1.06%, as of 0600 GMT. Lead September JGB futures finished the day 0.16 higher at 142.29.
The JGB market was largely unaffected by news that former parliamentary affairs chief Jun Azumi was selected as the new finance minister.
While market participants seem to believe Azumi's appointment won't drastically change previous fiscal policy, not much is known about his stance on fiscal and foreign-exchange matters.
UBS Securities senior strategist Atsushi Ito said Azumi, who is seen as having firm ties with opposition parties, will continue his predecessor's pursuit of tax hikes. Previous finance minister Yoshihiko Noda now becomes prime minister.
The market will keep a close eye on Azumi's debut press conference later in the day for hints on his stance on currency intervention and on the Bank of Japan's monetary policy.
The Bank of Japan is unlikely to decide on further monetary easing steps during next week's policy meeting as the yen has stopped appreciating, at least for now, and Japanese stocks have risen for six straight trading days, sources close to the matter said Thursday.
But the central bank will monitor market developments before making a decision at the two-day meeting starting Tuesday due to a possibility of the yen resuming its sharp ascent or global stock markets sliding again, depending on U.S. economic data and other factors.
At next week's meeting, the BOJ is expected to weigh the impact of the decelerating U.S. and European economies on Japan's economy, which is on the path to recovering from the aftermath of the March 11 megaquake and tsunami that devastated the northeastern region.
Speculation mounted last month that the BOJ may take additional easing measures to arrest the yen's assent after the currency hit a postwar record high of 75.95 to the U.S. dollar on Aug. 19.
But a senior BOJ official said that "a sense of urgency seen at one point has receded somewhat," with the dollar recently hovering in the upper 76 to 77 yen range and the Nikkei Stock Average finishing above the 9,000 level Thursday for the first time in two weeks.
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