May 13, 2019 / 3:03 AM / 4 months ago

JGBs gain as intensifying trade war supports safe-haven debt

TOKYO, May 13 (Reuters) - Japanese government bond prices gained on Monday as an intensifying U.S.-China trade war supported investor demand for safe-haven debt.

The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

The trade conflict escalated on Friday as U.S. President Donald Trump’s tariff increase to 25% from 10% on $200 billion of Chinese goods kicked in. Beijing has vowed to retaliate, but did not provide further details.

The benchmark 10-year JGB yield dipped half-a-basis point to minus 0.055 percent.

The 20-year yield also declined by half-a-basis point to 0.360 percent.

JGBs were also lifted as the Bank of Japan conducted a regular debt-buying operation, through which it offered to buy 750 billion yen ($6.83 billion) of one- to five-year bonds.

Japan’s Nikkei stock average sank to a near two-month low on Monday as the prospect of a drawn-out U.S.-China trade war hurt riskier assets.

$1 = 109.7400 yen Reporting by the Tokyo markets team, Editing by Sherry Jacob-Phillips

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