JGBs end down, still wobbly after previous day's big fall

Credit: REUTERS/Thomas White

Japanese government bond prices failed to keep early gains to end flat to slightly lower on Thursday, with markets still shaky after a big fall the previous day on improving global economic outlook.

TOKYO, Nov 7 (Reuters) - Japanese government bond prices failed to keep early gains to end flat to slightly lower on Thursday, with markets still shaky after a big fall the previous day on improving global economic outlook.

The 10-year JGB futures 2JGBv1 opened 0.21 point higher, in line with gains in their global peers following Reuters report that a U.S.-China deal may be delayed, but oscillated to end down 0.03 point at 153.20.

On Wednesday, the contract fell 0.66 point, the third biggest daily fall since the Bank of Japan (BOJ) started to control the 10-year yield in 2016 on receding expectations of a BOJ rate cut.

While aggressive selling has subsided on Thursday, the market sentiment remained shaky with investors growing optimistic on the global economic outlook.

The 10-year JGB yield JP10YTN=JBTC was flat at minus 0.090%, having revisited Wednesday's five-month high of minus 0.074% touched at one point.

The five-year yield JP5YTN=JBTC rose 0.5 basis point to minus 0.210%.

"To hold negative-yielding bonds, investors would need a conviction that interest rates will fall further in the future on the BOJ's rate cut. As BOJ rate-cut hopes recede, those who had bought them for dealing purpose might have sold them," said Tadashi Matsukawa, head of fixed income investments at PineBridge Investments in Tokyo.

The 20-year JGB yield JP20YTN=JBTC was flat at 0.260% while the 30-year yield JP30YTN=JBTC rose 0.5 basis point to 0.405%.

The 40-year JGB yield JP40YTN=JBTC rose 1 basis point to 0.430%.

(Reporting by Tokyo Markets Team; editing by Uttaresh.V)

((hideyuki.sano@thomsonreuters.com; +81 3 4563 2768 ))

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