JGBs inch up as growth worries persist

TOKYO: Japanese government bond prices were steady to slightly firmer on Friday, after data failed to dispel concerns about recession in the United States, though liquidation of long positions ahead of a long weekend in the US capped gains.

Ten-year JGB futures rose 0.13 point to 142.26, extending their rebound from a three-week low of 142.04 hit on Thursday on hedge selling for a 10-year bond auction.

The yield on cash 10-year bonds fell 1.0 basis point to 1.070pc , while the 30-year yield stayed flat at 2.015 percent .

The market took cues from gains in US Treasuries on Thursday. US bonds advanced as the latest jobs and factory data stoked fears of a dismal August payrolls report and bets the Federal Reserve will introduce more stimulus to avert a new recession.

Although the Japanese economy is seen as recovering near-term after severe disruptions from the earthquake and nuclear crisis, a headwind in the global economy is likely to raise doubts about that scenario.

Still, the market was curbed by selling from foreign accounts, who were aggressive buyers of bonds globally last month, ahead of a long US weekend and a rollover of benchmark futures next week, a trader said.

The market showed no reaction to the news that Prime Minister Yohihiko Noda named Jun Azumi, a loose ally of Noda, as finance minister.

Market players do not expect radical policy change, as Azumi is not known to have a strong position on economic policy.

Copyright Reuters, 2011