Monday, December 4

JGB yields track Treasury peers lower, ECB, Powell on focus

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TOKYO — Japanese government bond yields fell on Thursday, tracking declines in US Treasury yields overnight, while caution remains ahead of European Central Bank rate decision and comments from the head of the Federal Reserve.

The 10-year JGB yield fell 0.5 basis point to 0.240%, after hitting 0.245% in the previous session, its highest since July 20.

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The 20-year JGB yield fell 1.5 basis points to 0.925% and the 30-year JGB yield fell 2 basis points to 1.280%.

“Investors bought back bonds as the pace of rising rates in the United States and Europe took a pause,” said Shinsuke Kajita, chief strategist at Resona Holdings, adding there is caution ahead of a series of market moving cues, including ECB policy makers meeting and Powell’s speech.

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Benchmark US Treasury yields tumbled overnight after earlier hitting three-month highs, as demand for dollars helped send money into the government debt.

Markets are awaiting a speech by Fed Chair Jerome Powell later in the day for signs of any let up in the central bank’s hawkish approach to tackling inflation.

The ECB is widely expected to raise rates by 75 basis points (bps) later on Thursday (1215 GMT) to fight runaway inflation, although Europe’s energy crisis has kept the euro under pressure.

The 40-year JGB yield fell 2.5 basis points to 1.445%.

The two-year JGBs did not trade and the yield remained at -0.085%. The five-year yield fell 0.5 basis point to 0.020%.

Benchmark 10-year JGB futures rose 0.25 point to 149.52, with a trading volume of 9,609 lots. (Reporting by Tokyo markets team; Editing by Krishna Chandra Eluri)