Japanese government bond prices surge

Japanese government bond (JGB) prices inched up on Monday as stocks fell following a surge in the cost of crude oil to a record high. The gains in JGBs were modest given a considerable slide in past sessions, as dealers trying to gauge bonds' next move waited to see just how much impact rising oil prices would have on other markets.
"Oil prices are at record highs, so the market wants to see how this is going to impact stock prices. It looks like there's a wait-and-see attitude in the market today," said Naomi Hasegawa, senior fixed-income strategist at Mitsubishi Securities.
"If this is the start of a climb to $60 or $70 (a barrel), oil prices could have a considerable impact on stock and bond markets as they could raise concerns about higher inflation."
At 0611 GMT, US crude oil futures were hovering around $59 per barrel after touching a record high of $59.18. The Nikkei stock average slipped 0.27 percent.
Ten-year JGB futures for September delivery ended the afternoon session up 0.17 point at 139.97, just off a two-month low of 139.60 hit on Friday.
The yield on the benchmark cash 10-year JGB edged down two basis points to 1.280 percent after climbing to a one-month high of 1.315 percent late last week. Analysts said that levels around 1.3 percent remained supported by demand from investors keen to buy on dips.
Twenty-year debt was yielding down half a basis point at 1.965 percent, easing after hitting a one-month high of 1.985 percent following an uninspiring 20-year auction late last week.
Policy meeting minutes from the Bank of Japan released on Monday showed that board members Toshikatsu Fukuma and Atsushi Mizuno in May opposed keeping the central bank's 30-35 trillion yen ($275-321 billion) current account target and allowing only for temporary breaches. Fukuma and Mizuno proposed lowering the target to 27-32 trillion yen, only to be rejected by a vote of 7-2 at meetings both in April and May.
On both occasions, the central bank decided it would tolerate a temporary fall below the target range only if necessary.