Home Business JGB yields track U.S. peers’ higher amid domestic equities rally

JGB yields track U.S. peers’ higher amid domestic equities rally

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TOKYO — Japanese government bond yields tracked overnight gains in U.S. yields on Wednesday, while rallies in Japanese equities weighed on fixed income investor sentiment.

The 10-year JGB yield rose 0.5 basis point to 0.040%, while the 20-year JGB yield rose one basis point to 0.430%.

Japan’s Nikkei index rose to a near six-month high on Wednesday on hopes for economic recovery under a new administration after Prime Minister Yoshihide Suga steps down next month.

Investors are also cautious about possible issuances of bonds to fund Japan’s supplementary budget, a strategist said.

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Fumio Kishida, who announced his candidacy in a leadership vote for the Liberal Democratic Party (LDP), has called for an economic stimulus package worth “tens of trillions of yen” to combat the coronavirus pandemic.

Any winner of the vote will likely become prime minister to replace Suga, who last week said would step down.

Yields on longer term notes also gained, with the 30-year JGB yield rising one basis point to 0.665% and the 40-year JGB yield gaining 0.5 basis point to 0.745%.

The two-year JGB yield rose 0.5 basis point to minus 0.125%

The five-year yield was unchanged at minus 0.100%.

Benchmark 10-year JGB futures fell 0.08 point to 151.85, with a trading volume of 39,515 lots.

(Reporting by Tokyo markets team; Editing by Kim Coghill)