JGB yields hit 7-week lows on fears about Europe, slowing growth

27 Sep, 2012

 

JGBs gains tracked firmer US Treasuries prices after protesters in Greece and Spain took to the streets to oppose unpopular austerity measures.

 

Greece's international lenders continued to struggle to come up with a plan to restructure that country's debt.

 

"There is concern that even the easy monetary policies in the US and Europe won't be enough to turn around slowing growth, and of course there are fears about Spain and Greece," said a fixed-income fund manager at a Japanese trust bank.

 

"There is also a perception that the Bank of Japan is lagging the US and Europe in easing, meaning that investors here expect more easing to come, sooner or later," he said.

 

Benchmark 10-year JGB futures ended the morning session up 0.05 point at 144.15 after rising as high as 144.25, their loftiest level since Aug. 7.

 

Cash bond trading was relatively thin ahead of the end of the Japanese half-year, but some investors said pension funds could step up purchases of superlong bonds to extend the duration of their portfolios.

 

The yield on the current 10-year cash bonds fell 1 basis point to 0.770 percent, its lowest level since Aug. 9.

 

The 30-year yield fell 1 basis point to a three-week low of 1.870 percent, while the 20-year note was so far untraded.

 

A two-year auction was expected to proceed smoothly as the Bank of Japan now buys much of the issuance of that maturity through its asset purchase programme.

 

The Ministry of Finance offered 2.7 trillion yen in 2-year JGBs with a coupon of 0.10 percent.

 

Copyright Reuters, 2012

Read Comments