JGBs Firm on Cue from U.S Treasury Yields

Japanese government bonds firmed on Monday, with superlong yields touching multi-month lows as JGBs took cue from falling U.S. Treasury yields in the wake of their lacklustre economic data.

The benchmark 10-year JGB yield was half a basis point lower on the day at 0.005 percent, while 10-year JGB futures ended up 0.06 point at 151.15. Earlier in the session, futures hit 151.21, their highest level since mid-November.

The 20-year JGB yield shed 1.5 basis points to 0.545 percent , matching its lowest level on Dec. 22, while the 30-year JGB yield fell 2.5 basis points to 0.735 percent , its lowest since mid-January.

The benchmark U.S. Treasury yield wallowed at five-month lows, catching up to global yields after the U.S. bond market was closed late last week to observe Good Friday.

The 10-year U.S. yield slipped as low as 2.198 percent and last stood at 2.210 percent, down from the U.S. close of 2.228 percent on Thursday.

U.S. economic data on Friday showed retail sales dropped more than expected last month as annual core inflation slowed to 2.0 percent, the smallest advance since November 2015.

On Monday, the BOJ offered to buy 450 billion yen ($4.16 billion) of five- to 10-year JGBs, in line with the amount it offered to purchase in that zone in its previous buying operations. It also offered to buy 100 billion yen of floating-rate JGBs linked to the consumer price index.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell