Japanese government bond prices followed US Treasuries higher on Friday as equities fell after the US Federal Reserve gave no hint that further monetary easing was imminent. Equities continued to sell off in Asia, giving a tailwind to bonds, as some investors were disappointed that Fed Chairman Ben Bernanke failed to specifically indicate that more US easing is ahead at the central bank's next policy meeting on June 19-20.
"I get a sense everyone was waiting for Bernanke's speech last night, waiting for the ECB, and now that's all passed without much of a risk, they're more comfortable to place their money (in JGBs)," said Shogo Fujita, chief Japan bond strategist at Bank of America Merrill Lynch. The 10-year JGB yield gave up 3 basis points to 0.845 percent, moving towards a nine-year low of 0.790 percent hit on Monday.
The 10-year JGB futures contract for June, which expires on Monday, ended up 0.19 point at 143.78, holding solidly above its 14-day moving average at 143.45. The September contract also gained 0.19 point to 143.59. Some strategists say that longer maturities are likely to benefit from adjustments ahead of a quarterly redemption of JGBs on June 20. The 30-year yield fell 2.5 basis points to 1.835 percent, after touching a five-week high of 1.865 percent on Thursday.
The finance ministry will auction 5-year JGBs next Tuesday and 20-year JGBs on Thursday. The 20-year yield slipped 3 basis points to 1.660 percent, while the five-year bond yield was flat at 0.200 percent, within sight of its nine-year low of 0.195 percent hit last week. The spread between 5- and 20-year yields narrowed to 1.460 points, after spiking to 1.495 points on Thursday, which was its highest level since September on a last-traded basis.
The JGB market largely shrugged off data released early Friday that showed Japan's April current account surplus unexpectedly fell from a year earlier, though first-quarter gross domestic product growth was revised up to 1.2 percent from the 1.0 percent initially reported.