JGBs hold steady as market weighs timing of BOJ hikes, demand at debt sales
- The benchmark 10-year JGB yield slid 0.5 basis point to 2.670%
TOKYO: Japanese government bonds held steady on Wednesday as investors weighed the timing of further central bank rate hikes and demand at debt auctions.
Here are a few details:
The benchmark 10-year JGB yield slid 0.5 basis point to 2.670%.
The five-year yield added 0.5 bp to 1.920%, marking a five-day streak of gains, the longest such run since May 20.
Yields move inversely to bond prices.
Demand at a sale of 5-year JGBs on Tuesday was seen as relatively weak.
The Ministry of Finance will hold a sale of 20-year bonds on Thursday.
“While the decline in crude oil prices will provide support for the market, amid adjustments ahead of tomorrow’s 20-year bond auction and lingering caution regarding the Bank of Japan’s rate hikes, the market is likely to struggle to sustain gains,” Takayuki Miyajima, senior economist at Sony Financial Group, said in a note.
A summary of opinions from the BOJ’s June meeting showed some board members called for further rate increases. Government plans for tax cuts and increased spending on targeted economic sectors have also stoked concerns about the nation’s finances.
“As the debate on tax cuts progresses, it seems that quite a few market participants are concerned that, despite the fall in crude oil prices, the yen is gradually weakening and long-term interest rates are likely to remain elevated,” Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, wrote in a note.
The yield on the 40-year JGB, Japan’s longest tenor, rose 1 bp to 3.77%.‑Reuters
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