TOKYO |
TOKYO May 31 (Reuters) – Japanese government bonds fell on
Tuesday as data fuelled hopes that factory output may rebound
quickly from disruptions caused by the March earthquake and
tsunami, with a bounce in the euro adding to pressure on
safe-haven government debt.
* A dealer for a Japanese brokerage cited investor-selling
of cash JGBs across maturities. Position tweaking by market
players before a 10-year auction on Wednesday helped exacerbate
the fall in JGBs, said a trader for a Japanese bank.
* Lead June 10-year JGB futures fell 0.25 point to 140.66
2JGBv1 JGBv1, dipping back below resistance at 140.90, the
200-day moving average. JGB futures have tested that resistance
over the past week but have not managed to break clearly higher.
* After the close of the morning JGB futures trading
session, rating agency Moody’s said it had placed Japan’s Aa2
sovereign rating on review for a possible downgrade, adding that
while a JGB funding crisis was unlikely in the near to medium
term, pressures could build over the longer term.
[ID:nT9E7GH024]
* The announcement followed a similar move last week by
ratings agency Fitch, which cut its outlook on Japan’s sovereign
debt. [ID:nL3E7GR1A6]
* Katsutoshi Inadome, fixed income strategist for Mitsubishi
UFJ Morgan Stanley Securities, said Moody’s decision to put
Japan’s sovereign rating on review for a possible downgrade was
unlikely to have much near-term impact on JGBs.
* “JGBs have not moved on such announcements in the past,
and I think the market will probably shrug it off,” Inadome
said.
* In the past, downgrades of Japan’s sovereign rating and
cuts to the outlook have had limited impact on JGBs, the bulk of
which are held by domestic investors who have taken such
announcements in their stride.
* The benchmark 10-year JGB yield rose 3 basis points to
1.150 percent and the 20-year JGB yield climbed 3
basis points to 1.930 percent .
* “There seems to be a bit of reaction to the data showing
that output is expected to post a V-shaped recovery,” said Jun
Fukashiro, chief fund manager for Toyota Asset Management,
adding that there have been concerns that output may take more
time to recover.
* While industrial output rose less than expected in April,
manufacturers surveyed by the Ministry of Economy, Trade and
Industry expect output to rise 8.0 percent in May and increase
7.7 percent in June. [ID:nL3E7GU07C]
* The euro hit a three-week high against the dollar
following a report that Germany could make concessions on
efforts to put together a bailout for Greece.
(Reporting by Masayuki Kitano; Editing by Joseph Radford)
Originally Published On: www.reuters.com – Original Article Here