JGBs gain in line with Treasuries, all eyes on U.S. Fed meeting outcome

Credit: REUTERS/THOMAS WHITE

Japanese government bond prices rose on Wednesday, tracking overnight moves in U.S. Treasuries, as investors shifted focus back to safe-haven debts, ahead of the U.S. Federal Reserve's policy statement release.

TOKYO, July 29 (Reuters) - Japanese government bond prices rose on Wednesday, tracking overnight moves in U.S. Treasuries, as investors shifted focus back to safe-haven debts, ahead of the U.S. Federal Reserve's policy statement release.

Benchmark 10-year JGB futures 2JGBv1 added 0.06 point to 152.36, with a trading volume of 12,956 lots, while the 10-year JGB yield JP10YTN=JBTC inched down half a basis point to 0.015%.

In the super-long zone, the 20-year JGB yield JP20YTN=JBTC dropped 2 basis points to 0.385%, a level unseen since June 22.

The 30-year JGB yield JP30YTN=JBTC dipped 2.5 basis points to 0.535%, while the 40-year JGB yield JP40YTN=JBTC fell 3 basis points to 0.555%, both hitting levels unseen since June 16.

At the shorter end of the curve, the two-year JGB yield JP2YTN=JBTC stood flat at minus 0.135%, while the five-year yield JP5YTN=JBTC edged down half a basis point to minus 0.120%.

The appeal of the safe-haven debt increased as the benchmark Nikkei index .N225 dropped 1.15% to hit a 2-1/2-week low on firmer yen and dismal earnings.

Market participants also looked to the Federal Reserve's policy statement due to be released later in the day. The Fed is widely expected to reinforce loose monetary policy.

The JGB market shrugged off Fitch's move to lower its outlook on Japan's long-term foreign currency rating to negative from stable, while the agency affirmed the country's rating at A.

The rating agency cited the impact from the COVID-19 crisis and rising public debt as policymakers try to get the economy back on track.

The Bank of Japan maintained the size of its bond purchase in its operation on Wednesday, buying 420 billion yen of 1-3 year JGBs and 350 billion yen of 3-5 year bonds.

(Reporting by Tokyo Markets Team; Editing by Rashmi Aich)

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

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