TOKYO, Dec 20 (Reuters) - Japanese government bond prices sagged on Friday, with the benchmark 10-year bond yield rising above zero percent for the first time since March, as a bearish mood persisted in the wake of a tentative U.S.-China trade deal.
Incentives to hold negative-yielding bonds are dwindling as investors become more optimistic about the global economic outlook following the deal.
Sweden ended its five-year experiment with negative interest rates on Thursday, sparking talk among market players whether that may become a model for other major central banks with negative rates including the Bank of Japan.
Sweden’s central bank, Riksbank, took the action even as the country’s economy is slowing and inflation is below target and not expected to be stable around 2% for years — settings that are not unfamiliar to Japan.
BOJ Governor Haruhiko Kuroda, however, reiterated on Thursday that deepening negative rates was among the central bank’s policy options.
Benchmark 10-year JGB futures fell 0.21 point to 151.83, hitting their lowest level in a year.
The cash 10-year JGB yield rose 1 basis point to 0.005%, the first time to trade at a positive yield since early March.
The 20-year JGB yield rose 2 bps to 0.310%, edging near its six-month peak of 0.325% touched last month, while the 30-year yield rose 2.5 bps to 0.435%.
The 40-year JGBs were untraded. The Ministry of Finance formally announced it would increase the issuance of that maturity from April.
The five-year yield rose 1 bp to minus 0.085%, near a one-year high of minus 0.075% touched last week. (Reporting by Tokyo Markets Team; Editing by Subhranshu Sahu)