January 6, 2020 / 4:40 AM / 2 months ago

JGBs gain on U.S.-Iran tensions, yields at 1-month low

TOKYO, Jan 6 (Reuters) - Japanese government bond prices gained on the first trading session of 2020 on Monday, as escalating tensions between the United States and Iran triggered safe-to-quality bids, pushing the benchmark 10-year yield down to a one-month low.

Weak U.S. manufacturing survey published on Friday also added to investor caution, even though they are generally sticking to the view that a mild growth in the global and Japanese economy will continue this year.

“On top of geopolitical concerns, there are concerns on the economy after weak U.S. ISM data. Given the market has priced out expectations of a BOJ (Bank of Japan) easing, we could see a revival of such expectations,” said Takenobu Nakajima, a senior strategist at Nomura Securities.

Benchmark 10-year JGB futures rose 0.23 point to 152.41, after a market holiday from Tuesday to Friday last week.

The 10-year JGB yield fell 1.5 basis points to minus 0.040%, a level last seen about a month ago.

The 20-year JGB yield fell 3.5 basis points to 0.240%, its lowest level since Nov. 29 while the 30-year JGB yield fell 3.5 basis points to 0.375%, a two month low.

The two-year JGB yield fell 3 basis points to one-month low of minus 0.165% while the five-year yield hit one-month low of minus 0.160% before bouncing back a tad to minus 0.145%, still 1.5 basis points lower than previous close at the end of last year.

The BOJ kept the size of its buying in JGBs unchanged at its operation on Monday. (Reporting by Tokyo Markets Team; Editing by Rashmi Aich)

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