10-year JGB yield hits zero for first time since Sept 2017 as risk-off dominates

TOKYO: Japanese government bond yields hit multi-month lows on Tuesday, with the benchmark 10-year yield hitting zero percent, as U.S. political chaos engulfed global financial markets causing the worst day for Tokyo stock prices in more than two years.

Demand for the safety of government bonds increased as investors have grown increasingly nervous about the political outlook in the United States in addition to concerns about a global economic slowdown.

U.S. President Donald Trump openly criticised the Federal Reserve days after reportedly discussing firing its chief while he sparred with Democrats in Congress, with no sign of tangible efforts to end partial government shutdown.

JGBs gained broadly, with the benchmark 10-year yield falling to zero percent for the first time since September 2017. It last traded 2.5 basis points lower on the day at 0.010 percent.

The super-long sector followed suit, with the 20-year yield  falling 3 basis points to 0.505 percent while the 30-year and the 40-year yields dropped 3.5 basis points to 0.705 percent and 0.835 percent, respectively, both hitting five-month lows.

Ten-year JGB futures gained 0.22 point to 152.52 in a holiday-thin trading, with a trading volume of 15,938 lots.

Japan's Nikkei index fell 5 percent to its lowest level in 20 months.