JGBs drop in line with U.S. Treasuries on trade deal hopes

Credit: REUTERS/Thomas White

Japanese government bond prices fell on Wednesday, tracking overnight losses in U.S. Treasuries, as investors favoured riskier assets after top U.S. and Chinese officials reaffirmed their commitment to a trade deal.

TOKYO, Aug 26 (Reuters) - Japanese government bond prices fell on Wednesday, tracking overnight losses in U.S. Treasuries, as investors favoured riskier assets after top U.S. and Chinese officials reaffirmed their commitment to a trade deal.

Benchmark 10-year JGB futures 2JGBv1 fell 0.16 point to 151.72, with a trading volume of 22,391 lots, while the 10-year JGB yield JP10YTN=JBTC edged up half a basis point to 0.035%.

At the shorter end of the yield curve, the two-year yield JP2YTN=JBTC stood flat at minus 0.115% after marking an eight-month high, while the five-year yield JP5YTN=JBTC rose one basis point to minus 0.080%.

In the super-long maturities, the 20-year JGB yield JP20YTN=JBTC added one basis point to 0.415%, while the 30-year JGB yield JP30YTN=JBTC gained 1.15 basis points to 0.600%.

The 40-year JGB yield JP40YTN=JBTC rose 2 basis points to 0.630%.

In their first formal dialogue since May, U.S. Trade Representative Robert Lighthizer, U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He reaffirmed their commitment to a Phase 1 trade deal, amid concern the deal could be on shaky ground due to escalating tensions between the two countries.

The Bank of Japan maintained the size of its JGB purchase on Wednesday and bought one-to-three year and five-to-ten year maturities worth 420 billion yen each, and 350 billion yen of three-to-five year JGBs.

(Reporting by Tokyo Markets Team; Editing by Shailesh Kuber)

((eimi.yamamitsu@thomsonreuters.com;))

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