TOKYO, June 30 |
TOKYO, June 30 (Reuters) – Japanese government bond futures
extended losses for a second straight session to hit a one-week
low on Thursday on easing worries about Greece’s debt woes, but
support at their 20-day moving average held firm.
* But many players believe the bull-run in JGBs is not over
yet with the Japanese bond market finding more support than
overseas markets from cash-rich domestic banks and insurers.
“Even though it looks like we will avoid a worst case
scenario with Greece’s fiscal problems, the global economy
continues to slow down and this will continue to support the
bond market,” said Makoto Yamashita, chief Japan interest rate
strategist at Deutsche Securities.
* U.S. Treasury yields reached their highest levels in a
month on Wednesday. Investors in Treasuries are now expected to
shift focus to what they expect will be an improving economic
story that could send yields still higher.
* The benchmark 10-year yield was up 2 basis points at 1.135
percent , moving away from a seven-month low of
1.085 percent marked this week, and underperforming other
maturities.
* Players said futures led declines, which meant medium-term
maturities such as seven-year cash bonds underperformed.
* But losses were limited as five-year notes and superlongs,
such as 20- and 30-years, were supported by investors such as
regional financial institutions, according to a trader at a U.S.
brokerage firm.
* The trader added that the volume of selling was limited as
supplies remained tight in most maturities, but position
adjustments ahead of an auction next week might be weighing on
10-year bonds.
* September 10-year JGB futures dropped 0.24 point to 141.10
2JGBv1, off a seven-month high of 141.63 hit on Tuesday and
approaching their 20-day moving average near 141.07.
* Foreign investors turned net sellers of Japanese bonds
last week, Ministry of Finance capital flow data showed on
Thursday. They sold a net 978.7 billion yen ($12.1 billion) of
bonds, the biggest volume of net sales since September 2008,
after net purchases of 96.2 billion the week before. Click on
* Foreign investors bought a massive five trillion in the
six weeks to May 28, but recent data suggests a slowdown in
foreign buying, led partly by China. Massive JGB redemption was
likely behind last week’s net selling.
($1 = 80.755 Japanese Yen)
(Reporting by Akiko Takeda; Editing by Edwina Gibbs)
Originally Published On: www.reuters.com – Original Article Here