Japanese government bond yields fell on Thursday, tracking overnight declines in U.S. Treasury yields, while investors were less cautious about an interest rate hike amid a stronger yen.
The 10-year JGB yield fell 2 basis points to 1.050%.
The two-year JGB yield fell 1 bp to 0.58% and the five-year yield fell 1.5 bps to 0.720%.
“Besides U.S. Treasury yields declines, the yen’s strength eased caution for the Bank of Japan’s rate hike at its December meeting,” said Keisuke Tsuruta, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities.
U.S. Treasury yields dropped on Wednesday as investors piled into U.S. government bonds following weak consumer sentiment surveys in Europe, while U.S. inflation concerns took a temporary backseat as data came in line with estimates.
The yen has rallied sharply for two days, rising through its 200-day moving average to 151.50 per dollar. It was slightly weaker in Asia, and was last down 0.3% at 151.575.
“Overall, the market still braces for the BOJ’s rate hike next month, but the yen’s move lifted sentiment on Thursday,” said Tsuruta.
Overnight index swaps indicated a 56% chance of the BOJ raising rates to 0.5% in December, as of 0603 GMT, with a more than 90% probability of the central bank raising rates to 0.75% by October next year.
The 20-year JGB yield fell 2 bps to 1.87%.
The 30-year JGB yield fell 1 bp to 2.295%.
The 40-year JGB yield rose 1 bp to 2.66
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