JGBs gain on expectations of stricter domestic virus curbs

Credit: REUTERS/THOMAS WHITE

Japanese government bond prices gained on Thursday on rising expectations Japan would impose more radical social distancing measures to arrest the breakneck spread of the coronavirus.

TOKYO, March 26 (Reuters) - Japanese government bond prices gained on Thursday on rising expectations Japan would impose more radical social distancing measures to arrest the breakneck spread of the coronavirus.

A recovery in U.S. stock futures triggered by a $2 trillion stimulus package has run out of steam, further boosting demand for safe-haven assets such as government bonds.

Benchmark 10-year JGB futures 2JGBv1 rose 0.70 point to 152.61, though the trading volume was light at 13,667 lots.

The 10-year JGB yield JP10YTN=JBTC fell 2.5 basis points to 0.005%, off a 16-month high of 0.095% touched a week ago.

Tokyo's governor has advised against non-essential outings until April 12, and the Japanese government was preparing to set up special headquarters to deal with the outbreak as early as Thursday afternoon.

The 20-year JGB yield JP20YTN=JBTC was flat at 0.295%, while the 30-year JGB yield JP30YTN=JBTC was also unchanged at 0.415%.

The two-year JGB yield JP2YTN=JBTC fell 1 basis point to minus 0.260%, the lowest level in two weeks, while the five-year yield JP5YTN=JBTC fell 1 basis point to minus 0.115%.

The 40-year JGB yield JP40YTN=JBTC rose 1 basis point to 0.445%, however, as the market absorbed fresh supply from a 400 billion yen ($3.62 billion) 40-year JGBs auction on Thursday.

The bid-to-cover at the auction dropped to 2.66 from 2.86 in the previous auction.

($1 = 110.5600 yen)

(Reporting by Tokyo Markets Team; Editing by Devika Syamnath)

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

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