TOKYO: Japanese government bond prices edged lower on Tuesday, with the 10-year yield hitting its highest level in almost three weeks, as hopes of more policy measures to support the global economy prompt unwinding of safe-haven bids in JGBs.
The 10-year JGB futures dipped 0.02 point to 144.05 , risking a decisive break below the kijun line on the daily Ichimoku chart -- an important support -- at 144.10 after having broken below the line briefly on Monday for the first time in six weeks.
A decisive break there could open the way for a test of 143.77, the 23.6 percent retracement of the market's rally from March to a nine-year high hit this month.
Whether that support will be convincingly broken depends largely on risk sentiment in the global financial markets after the European Central Bank's policy meeting on Thursday, market players say.
The 10-year cash bond yield rose 1.0 basis point to 0.785 percent, its highest since July 12 and 6.5 basis points above a nine-year low of 0.720 percent hit this month.
Sentiment towards safe-haven assets has retreated after comments from European Central Bank Mario Draghi last week raised expectations that the central bank will take fresh steps to help drive down the borrowing costs of Italy and Spain.
The market is also capped ahead of an auction of 2.3 trillion yen 10-year JGBs ($29.4 billion).
"I suspect that the market will be capped ahead of the auction for now. But there should be investor demand near 0.8 percent in the 10-year yield," said Keiko Onogi, senior JGB strategist at Daiwa Securities.
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