Japan's bonds gain a third week on stock losses
Monday, 28 June 2010
TOKYO, June 26 (Bloomberg): Japan's bonds rose for a third week as Asian stocks declined and the government pledged to balance its books within a decade, boosting demand for the nation's debt.
Benchmark 10-year yields dropped to the lowest level since 2003 as government reports showed export growth slowed and consumer prices fell for a 15th month, enhancing the purchasing power of the fixed payments from debt.
Bonds gained as Prime Minister Naoto Kan's administration also pledged to restrict debt sales and overhaul the tax system.
"Optimism is fading about the global economic recovery," said Katsutoshi Inadome, a strategist in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co, a unit of Japan's largest bank.
"Investors who'd thought yields would go up in June are playing catch-up and buying before the second quarter ends." The yield on the 1.3 per cent bond due June 2020 dropped six basis points this week to 1.14 per cent in Tokyo at Japan Bond Trading Co, the nation's largest interdealer debt broker.
The price rose 0.540 yen to 101.432 yen. The yield fell to 1.125 per cent yesterday, the least since Aug 18, 2003.
Ten-year bond futures for September delivery gained 0.45 this week to 141.06 at the afternoon close yesterday at the Tokyo Stock Exchange. They rose to 141.18, the highest for a benchmark contract since June 9.
Benchmark 10-year yields dropped to the lowest level since 2003 as government reports showed export growth slowed and consumer prices fell for a 15th month, enhancing the purchasing power of the fixed payments from debt.
Bonds gained as Prime Minister Naoto Kan's administration also pledged to restrict debt sales and overhaul the tax system.
"Optimism is fading about the global economic recovery," said Katsutoshi Inadome, a strategist in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co, a unit of Japan's largest bank.
"Investors who'd thought yields would go up in June are playing catch-up and buying before the second quarter ends." The yield on the 1.3 per cent bond due June 2020 dropped six basis points this week to 1.14 per cent in Tokyo at Japan Bond Trading Co, the nation's largest interdealer debt broker.
The price rose 0.540 yen to 101.432 yen. The yield fell to 1.125 per cent yesterday, the least since Aug 18, 2003.
Ten-year bond futures for September delivery gained 0.45 this week to 141.06 at the afternoon close yesterday at the Tokyo Stock Exchange. They rose to 141.18, the highest for a benchmark contract since June 9.