Japanese government bond prices edged up on Friday, as some market participants bought ahead of redemption's next week, but wariness ahead of the weekend's election in Greece limited moves. The yield curve flattened on bargain hunting in the superlong tenor, as a quarterly JGB redemption on June 20 underpinned demand from funds and insurers.
"The superlong end of the curve has been cheapening a little too aggressively, so it's natural to see some people coming in and picking up the bargains," said Le Ngoc Nhan, a JGB strategist at Morgan Stanley. Trading was thin throughout most of the session but turned more active in the afternoon, following the Bank of Japan's decision to hold monetary policy steady as widely expected.
The central bank also revised up its assessment on Japan's economy to say it is starting to pick up, and pledged to do its utmost to ensure the country's banking system remains stable if the Greek election outcome brings market turmoil. Plans for co-ordinated central bank action to stabilise financial markets, if needed, by providing liquidity and prevent any credit squeeze after Sunday's election reassured some investors, and took away some of the appeal of fixed-income assets, keeping gains in check. But the euro zone crisis kept some investors jittery. On Thursday, Spanish sovereign debt yield rose to a euro-era high above 7 percent, and Italy's borrowing costs also rose.
The 10-year JGB yield slipped 1 basis point to 0.850 percent, easing back towards a nine-year low of 0.790 percent hit on June 4. The 10-year JGB futures contract for September erased morning losses and ended up 0.04 point at 143.55, on relatively low volume of 22,221 contracts. The 20-year yield fell 1.5 basis points to 1.660 percent, while the 30-year yield also fell 1.5 basis points to 1.870 percent, after rising to 1.895 percent on Thursday, its highest level since April 27. The five-year yield was flat at 0.230 percent.
Comments
Comments are closed.