Sunday, August 14

Japan’s long-end JGB yields fall ahead of Fed’s rate decision

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TOKYO — Yields on longer-ended Japanese government bonds fell on Wednesday ahead of a rate decision by the US Federal Reserve and amid growing worries over an economic slowdown.

The 10-year JGB yield fell 0.5 basis points to 0.200% and the 20-year JGB yield fell 1.5 basis points to 0.820%.

The Federal Reserve later on Wednesday is expected to announce a 0.75 percentage point interest rate hike to fight inflation, with markets pricing about a 10% risk of a larger increase.

“There is a strong concern about economic slowdown and that has been pushing down yields,” said a market participant at a domestic firm.

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“The impact will be limited if the rate is raised by 0.75 percentage point.”

Adding to concerns was the International Monetary Fund forecast for global real GDP growth to 3.2% in 2022, down from its 3.6% forecast issued in April, with downside risks from high inflation and Russia’s invasion of Ukraine potentially pushing the world economy to the brink of recession.

The 30-year JGB yield fell 2 basis points to 1.150% and the 40-year JGB yield fell 3 basis points to 1.310%.

Benchmark 10-year JGB futures rose 0.05 point to 150.26, with a trading volume of 10,293 lots.

Yields on shorter-ended notes rose, with the two-year JGB yield climbing 0.5 basis point to -0.075% and the five-year yield rising 0.5 basis point to minus 0.005%. (Reporting by Tokyo markets team)

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