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JGBs steady to weaken as investors await US election outcome

Yields on Japanese government bonds initially tracked US counterparts higher, with longer-dated Treasury yields rising sharply overnight as investors had priced in a Joe Biden victory. (Shutterstock)
Yields on Japanese government bonds initially tracked US counterparts higher, with longer-dated Treasury yields rising sharply overnight as investors had priced in a Joe Biden victory. (Shutterstock)
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04 Nov 2020 03:11:41 GMT9
04 Nov 2020 03:11:41 GMT9

TOKYO:  Japanese government bond prices were steady to slightly weaker on Wednesday, as investors looked for clues about the US presidential election results, while a successful 10-year debt sale helped pare some earlier losses.

Yields on Japanese government bonds initially tracked US counterparts higher, with longer-dated Treasury yields rising sharply overnight as investors had priced in a Joe Biden victory.

But investor sentiment across markets quickly changed on signs President Donald Trump could well snatch Florida and was much closer in other major battleground states than polls had predicted.

Despite many headlines going around about early results of the US presidential election, the Japanese bond market is still in wait-and-watch mode, said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

The bid-to-cover ratio, a gauge of demand, at the 2.6 trillion yen 10-year debt sale increased to 4.16 from the previous auction’s 4.06.

Following the auction result, benchmark 10-year JGB futures rose 0.14 point to 151.97, with a trading volume of 34,989 lots, while the 10-year JGB yield fell 0.5 basis point to 0.035 percent.

In the super-long zone, the 20-year JGB yield was flat at 0.410 percent.

The 30-year JGB yield rose half a basis point to 0.640 percent, after hitting its highest level since January 2019 of 0.645 percent.

The 40-year JGB yield was up half a basis point to 0.675 percent.

At the shorter end of the curve, the two-year JGB yield and the five-year yield stood flat at minus 0.125 percent and minus 0.095 percent, respectively. 

Reuters 

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