TOKYO: Japanese government bond prices rose on Wednesday, with the benchmark 10-year yield hitting a three-week low, drawing support from concerns over Europe's debt crisis and a global slowdown though trade was thin ahead of Japanese half-year end.
The market had only a mild, short-lived dent after Japan's main opposition party, which is likely to return to power after a soon-to-be-called election, picked an opponent of a planned tax hike as its next leader.
"In the grand scheme of things, the key for the market is whether the global economy will pick up after stimulus by the Fed and bond buying plan by the European Central Bank, or if we will see a further economic downturn," said Naomi Muguruma, senior strategist at Mitsubishi UFJ Morgan Stanley Securities.
Protests in Spain underscored the country's financing challenges and dulled investors' risk appetite, already dimmed by signs of slowdown in many parts of the world, including China.
The yield on current 10-year cash bonds fell 1.5 basis point to 0.780 percent, its lowest level in three weeks.
While trading in cash bonds was slow due to the Japanese financial half-year end on Sept 30, expectations of month-end buying by pension funds also provided some support.
The 20-year bond yield fell 1.0 basis point to 1.640 percent , near this month's low of 1.635 percent set about three weeks ago while the 30-year yield fell to a two-week low of 1.880 percent and last stood at 1.885 percent.
JGBs gains followed rise in US Treasuries as investors remained unconvinced whether recent stimulus measures by the world's major central banks could lift the moribund global economy.
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