TOKYO: Japanese government bonds were mostly flat on Wednesday, recouping losses that pushed the five-year yield near a three-month high after a report boosted expectations that Europe will strengthen the region's rescue fund, denting appetite for safe-haven debt.
December 10-year JGB futures closed up 0.02 point at 142.20 at midday, after falling as low as 142.12.
Players took cues from a fall in US Treasuries, but limited gains in share prices restricted losses in JGBs. Futures remained above support at their 75-day moving average at 142.14.
Market participants stayed on the sidelines, with the volume on lead JGB futures at 7,494 lots at midday, far below half the average daily volume for the past month at around 9,000 lots.
"JGBs are increasingly being left out of the global trend for a change in risk sentiment ... JGBs will likely stay at current levels unless their charts break through points which suggest a clear change in sentiment," said a trader at a European brokerage.
In cash bonds, the five-year yield rose to 0.385 percent, its highest since July 29 on renewed hopes about a solution to the euro zone debt crisis, but later fell to 0.375 percent, down 0.5 basis point. The 10-year yield inched down 0.5 basis point to 1.015 percent, staying in the upper-end of a range from 0.965-1.030 percent seen in the last month.
Gains in JGBs are seen limited as the possibility of the euro zone debt crisis spreading to the global financial system has receded somewhat, though scepticism remains on whether policymakers will take bold enough steps to contain the crisis.
"Fears on Europe have eased, but the stance of investors is unlikely to become 'risk on' ... if Europe takes steps to recapitalise its banks, they will have to control their lending to meet their balance sheet targets, and this is negative for economies," said Jun Fukashiro, chief fund manager at Toyota Asset Management.
The Nikkei stock average rose 0.5 percent on Wednesday.
A report on Tuesday by Britain's Guardian newspaper that France and Germany had agreed to boost a euro zone financial rescue fund to 2 trillion euros was later denied by a senior euro zone source, who told Reuters there had been no mention of such a deal.
Comments
Comments are closed.