JGB yields hit 9 month lows on global risk aversion

TOKYO: Japanese government bond prices gained for the fourth straight day on Friday on mounting worries that the global economy may be faltering, sending the 10-year JGB yield to a level not seen in nine months.

The 10-year cash bond yield dropped as far as 0.970 percent , its lowest since November last year, with many market players saying falls to around 0.90 percent were increasingly likely.

Declines in JGB yields in recent weeks have been much smaller than those in US bond yields, with the 10-year yield spread between Japan and the United States narrowing to 105 basis points, the tightest since the 2008-09 financial crisis.

Part of the reason behind the modest drop in JGB yields was that they were already very low and had limited room to fall.

Investors were also cautious about pushing the 10-year yield further below one percent, remembering that its fall to 0.82 percent last year was quickly reversed.

The five-year yield fell 2 basis points to 0.305 percent , a nine-month low, while the 20-year yield declined 2.5 basis points to 1.765 percent.

Copyright Reuters, 2011