TOKYO: Japanese government bond (JGB) prices slid on Monday, as concerns about the inflationary impact of higher oil prices reduced the appeal of coupon-bearing debt.
Those worries overpowered demand for JGBs as a safe haven, despite the nervous wait in the markets for Iran’s response to US bomb strikes on its nuclear facilities during the weekend.
The 10-year JGB yield rose 2.5 basis points (bps) to 1.42%, while benchmark 10-year JGB futures fell 0.26 yen to 139.17 yen. Bond yields rise when prices fall.
The five-year yield jumped 3 bps to 0.98% and the two-year yield added 1.5 bps to 0.735%.
The 20-year JGB yield, however, was flat at 2.355%, and earlier edged down to 2.34% for the first time in almost two weeks, ahead of an auction of the securities on Tuesday.
Mizuho analyst Gen Taniguchi said in a research note that the 20-year bond sale could see demand due to the more muted sensitivity to oil prices in the longer tenors, and a finance ministry plan to reduce issuance of the longest-dated JGBs to improve the supply-demand balance.
The 30-year and 40-year JGBs had not traded as of 0328 GMT.