TOKYO: Japanese government bond (JGB) yields fell on Thursday as investors were cautious ahead of the country’s upcoming lower house election results. The 10-year JGB yield fell 2 basis points (bps) to 0.955%.
The five-year yield fell 0.5 bp to 0.585%.
Local media have reported that the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito may lose their majority in the Oct. 27 election.
Prime Minister Shigeru Ishiba dissolved the lower house of parliament on Oct. 9, setting up the snap election.
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“Investors cannot actively buy JGBs before they see the outcome of the election.
Depending on the outcome, the Bank of Japan’s monetary policy may be affected,“ said Gen Taniguchi, market analyst at Mizuho Securities.
The Mainichi newspaper reported the ruling coalition may not reach 200 seats for an outright majority in the 465-seat chamber.
“The LDP may add other parties to the coalition and those parties may have different stance on the monetary policy from the LDP’s,” Taniguchi said.
The two-year JGB yield, which is most sensitive to the BOJ’s policy, was flat at 0.445%. The 20-year JGB yield fell 1 bp to 1.77%.
The yield inched up to 1.785% earlier in the session after the auction for the bonds with the same maturity received a weak demand.
The 30-year JGB yield fell 0.5 bp to 2.2%. The 40-year JGB yield fell 1.5 bps to 2.5%.
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