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JGBs track U.S. Treasuries higher as U.S. election counting goes on

TOKYO, Nov 5 (Reuters) - Japanese government bond (JGB) prices rose on Thursday, tracking overnight jumps in U.S. Treasuries, as the U.S. election count pointed to a divided government and raised expectations of a smaller stimulus spending.

Biden predicted a U.S. election win over President Donald Trump after pivotal victories in Michigan and Wisconsin, but the risk of a prolonged contested election remains as the Republican incumbent sought to offset a narrowing path to re-election with lawsuits and demands for a recount.

Yields on U.S. Treasuries, which had climbed to multi-month highs ahead of the election results, plummeted when prospects faded for a Democratic sweep, along with massive stimulus spending, that had been priced into the market.

Benchmark 10-year JGB futures rose 0.19 point to 152.17, with a trading volume of 21,876 lots, while the 10-year JGB yield lost 1.5 basis points to 0.020%.

In the super-long zone, the 20-year JGB yield fell 2.5 basis points to 0.380%.

The 30-year JGB yield dropped 3 basis points to 0.610%, moving away from the highest level since January 2019 of 0.645% hit in the previous session.

The 40-year JGB yield dipped 3.5 basis points to 0.640%.

At the shorter end of the curve, the two-year JGB yield was down 1 basis point to minus 0.135%, while the five-year yield fell 1.5 basis points to minus 0.115%.

The Bank of Japan increased the amount of 1-3 and 3-5 year bonds in Thursday’s regular operation to 500 billion yen ($4.79 billion) and 420 billion yen, respectively, but kept 25-40 year bonds unchanged. ($1 = 104.3000 yen) (Reporting by Tokyo markets team; editing by Uttaresh.V)

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