Business & Finance

JGBs slightly firmer, take cue from Treasuries

Published Updated

The benchmark 10-year JGB futures contract ended morning trade up 0.09 point at 143.92, moving further away from Aug. 16's 2-1/2-month low of 143.27.

 Futures continued to hold above technical support at their 14-day moving average at 143.72.

The 10-year cash yield slipped half a basis point to 0.800 percent, though was still well off a nine-year low of 0.720 percent hit last month. Benchmark yields reached a two-month high of 0.860 percent in mid-August.

Gains were limited by a modest recovery in equities, with the Nikkei stock average rising 0.3 percent, as well as by thin market conditions.

"Moves are small. JGBs didn't sell off so much lately, so they don't have much room to correct," said a fixed-income fund manager at a Japanese trust bank.

"Trading is at a near-standstill this week ahead of Jackson Hole," he added.

US Federal Reserve Chairman Ben Bernanke will speak on Friday at an annual event in Jackson Hole, Wyoming. Investors will parse his words for signals on the bank's policy intentions.

Bernanke's counterpart at the European Central Bank, Mario Draghi, had been scheduled to speak at the event on Saturday, but has opted out, citing a heavy workload.

Expectations of a third round of quantitative easing, or QE3, pushed benchmark Treasury yields to three-week lows on Tuesday, after they hit a three-month high last week.

The 20-year JGB yield shed half a basis point to 1.660 percent, while the yield on 30-year debt was flat at 1.895 percent.

 The spread between the 10-year and 30-year yields edged up to 1.095, its widest since mid-October 2010.

Copyright Reuters, 2012