JGBs dip, trade anxiety supports long-dated bonds

Credit: REUTERS/THOMAS WHITE

Japanese government bond prices sagged on Tuesday, in line with retreating global bond prices, after the United States and China appeared to have struck a tentative deal last week to avoid immediate tariff rate hikes.

TOKYO, Oct 15 (Reuters) - Japanese government bond prices sagged on Tuesday, in line with retreating global bond prices, after the United States and China appeared to have struck a tentative deal last week to avoid immediate tariff rate hikes.

However, the lack of details on the agreement between the world's two largest economies have led many investors to stay cautious about the global economic outlook, underpinning demand for bonds.

The Bank of Japan maintained the amount of its bond buying on Tuesday as expected, buying 420 billion yen ($3.88 billion) of one- to three-year JGBs, 340 billion yen of three- to five-year bonds and 350 billion yen of five- to 10-year bonds.

Benchmark 10-year JGB futures 2JGBv1 dipped 0.10 point to 154.51, while the yield on the benchmark 10-year JGBs JP10YTN=JBTC rose 0.5 basis point to minus 0.180%.

The two-year JGB yield JP2YTN=JBTC rose 1 basis point to minus 0.285%, highest in almost a month, while the five-year yield JP5YTN=JBTC rose 1 basis point to minus 0.305%, a two-week high.

The longest end of the yield curve fared better, enjoying steady demand from investors as the only source of positive yield in the market.

The 20-year JGB yield JP20YTN=JBTC was flat at 0.210%, while the 30-year JGB yield JP30YTN=JBTC dipped 0.5 basis point to 0.380%.

The 40-year JGB yield JP40YTN=JBTC fell 0.5 basis point to 0.425%.

($1 = 108.32 yen)

(Reporting by Tokyo Markets Team, Editing by Sherry Jacob-Phillips)

((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827 ))

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