SINGAPORE: Japanese government bond yields edged higher on Friday, after financial support for Credit Suisse and First Republic Bank allayed some fears of a global banking crisis that has rattled the financial markets through the week.
Benchmark 10-year JGB futures fell 0.41 yen to 148.03.
The 10-year JGB yield rose 1.5 basis points (bps) to 0.300%. Ten-year interest rate swaps were at 0.6%. They have traded in a wide range between 0.3% and 1.1% this year.
The collapse of Silicon Valley Bank has sent shockwave through the financial system this week, with Swiss bank Credit Suisse requiring an emergency central bank loan of up to $54 billion to shore up its liquidity.
On Thursday, large US banks injected $30 billion in deposits into First Republic Bank to rescue the lender caught up in the widening crisis.
“Risk aversion has receded for a while, but the experience of the global financial crisis has left the market wary that there may still be a ‘bomb’ somewhere,” said Takenobu Nakajima, chief interest rate strategist at Nomura Securities.
Japanese yields began falling sharply after the Bank of Japan (BOJ) maintained its ultra-low policy last week, with banking turmoil exacerbating those declines.
JGB superlong yields rise as US yields jump, month-end buying fades
The central bank had been struggling to contain elevated yields, as the change in its leadership raised expectations of a further tweak in its policy. The 20-year JGB yield rose 1 bp to 1.050%, while the 30-year JGB yield was flat at 1.265%.
The two-year JGB yield fell 0.5 bp to -0.080%, while the five-year yield rose 1 bp to 0.115%.
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