TOKYO: Japanese government bond prices gained on Wednesday, tracking US bonds after Federal Reserve Chairman Ben Bernanke revived expectations that supportive monetary policy would remain in place for a long time.
Bernanke said on Tuesday it was too soon to declare victory in the US economic recovery, and that the central bank would take no options off the table, even though he did not suggest a further round of bond buying was imminent.
Ten-year JGB futures rose 0.12 point to 141.93, filling the chart gap at 141.59-141.90 created during the market's rout in mid-March amid rising optimism on the global economy.
The 10-year cash bond yield dropped 1.0 basis point to 1.005 percent, its lowest level in two weeks and edging near the one percent mark, which has been seen as a major resistance level.
The longer end of the yield curve underperformed the rest of the market, with 20- and 30-year bond yields falling just a half basis point, to 1.765 percent and 1.940 percent respectively.
The curve may steepen in the long run, said a trader at a Japanese bank, on worries about poor fiscal conditions in Japan. The country's debt has reached 200 percent of its economy, while its fiscal deficit is larger than most euro zone countries.
Some market players are concerned that JGBs could falter if Prime Minister Yoshihiko Noda's plan to raise Japan's sales tax fails to pass through the parliament later this year.
The main ruling Democratic Party of Japan effectively signed off on Noda's tax hike bills early on Wednesday, clearing the way for him to approve them in cabinet later this week, before sending them on to parliament.
Many participants, however, expect limited activity in JGB markets until the end of the Japanese financial year on March 31.
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