TOKYO, July 13: Japan’s long-dated government bond prices edged up on Friday, with the 10-year yield hitting a nine-year low for the third day, tracking lower U.S. Treasury yields and on concerns over the euro zone crisis after Moody’s cut Italy’s credit ratings.
China’s economy grew 7.6 percent in the April-June quarter from a year earlier, the slowest pace since the January-March quarter of 2009 and in line with market expectations.
The benchmark 10-year yield inched down 0.5 basis point to 0.760 percent after trading as low as 0.755 percent, while the 10-year bond futures were unchanged at 144.36 after hitting 144.46, not too far from their record high of 145.09.
Yields on 20-year bonds slipped 1.5 basis points to 1.580 percent after touching their lowest since August 2010 at 1.565 percent, and those on 30-year debt ticked down 2.5 basis points to 1.780 percent.
‘Today’s move is more dominated by those moves in the U.S. market and Italy’s downgrade, so the curve is bull flattening led by the superlong sector, which is not directly affected by the BOJ decision,’ said Tomohisa Fujiki, interest rate strategist at BNP Paribas in Tokyo.
The Bank of Japan scrapped a minimum rate for its purchase of short-term securities on Thursday, which analysts said was an attempt to lower the short-end of the yield curve.
‘The 2-year and 5-year are staying relatively stable today, which means people may be thinking the effect itself is relatively small for the short-end of the sector,’ Fujiki said.
‘As the market is driven by the superlong sector, I would say that concerns over economic growth and Italy are dominating the market.’
Moody’s Investors Service on Friday surprised markets by downgrading Italy’s government bond rating by two notches to Baa2, which is just two grades above ‘junk’ status, and warned it could cut it further, piling on pressure just hours before the country launches its latest bond sale.
On Thursday, U.S. Treasuries rose in price as worries over Europe’s debt crisis and its possible repercussions on the global economy fed safe-haven buying, pushing benchmark yields down to near historic lows.
(AGENCIES)
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