TOKYO: Japanese government bonds skidded on Monday, following U.S. Treasuries lower in the wake of upbeat U.S. jobs data which bolstered the view that the Federal Reserve will consider hiking rates in June.
Nonfarm payrolls rose 295,000 last month after an increase of 239,000 in January, the Labor Department said on Friday. The decline in the U.S. unemployment rate to 5.5 percent from 5.7 percent in January took it to its lowest level since May 2008.
Benchmark 10-year note yields posted their biggest rise since November 2013 on Friday, as investors increasingly priced in the possibility of a June rate hike.
The yield on 10-year cash JGBs added 4.5 basis points to 0.425 percent, while the 10-year JGB futures contract ended down 0.41 point at 147.26.
The superlong zone underperformed, with the 20-year yield rising 5 basis points to 1.215 percent, while the 30-year yield added 5.5 basis points to 1.485 percent .
Bank of Japan deputy governor Hiroshi Nakaso said the central bank must ease monetary policy further if the oil-price falls hamper its efforts to ramp up inflation expectations. He added that he did not see any risk of the BOJ facing trouble buying bonds in the near future.
The BOJ now buys 8-12 trillion yen of Japanese government bonds each month from the market, roughly the same size issued by the government. Critics say the huge purchases are drying up liquidity and may cause sudden swings in the market.
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