July 31, 2020 / 6:28 AM / 14 days ago

Long-dated JGB yields hit 1-1/2-mth low on virus resurgence fears

TOKYO, July 31 (Reuters) - Yields on longer-dated Japanese government bonds (JGBs) dropped to a near 1-1/2-month low on Friday as investors turned to safe-haven debt amid worries about a resurgence in cases of the novel coronavirus at home and abroad.

Benchmark 10-year JGB futures added 0.08 point to 152.39, with a trading volume of 20,734 lots.

In the cash bond market, the 10-year JGB yield briefly fell 1 basis point to 0.005%, hitting its lowest since June 26. The yield was last down half a basis point to 0.010.

Yields across the super-long zone marked their lowest levels since mid-June, with the 20-year JGB yield dropping 1.5 basis points to 0.375%.

The 30-year JGB yield lost 2 basis points to 0.520%, while the 40-year JGB yield slipped 3 basis points to 0.535%.

At the shorter end of the curve, the two-year JGB yield was down half a basis point to minus 0.140%.

The five-year yield fell 1 basis point to minus 0.130%, its lowest since June 3.

Investors remained wary of the impact the COVID-19 pandemic has had on the economy.

Meanwhile, Tokyo Governor Yuriko Koike warned that Japan’s capital could declare a state of emergency if the coronavirus situation deteriorated further, after fresh infections jumped by a record daily high of 463.

Surging infections also threatened recovery in the U.S. economy after its GDP suffered the deepest contraction since the Great Depression in the second quarter, while weekly jobless claims increased 12,000 to 1.434 million.

The Bank of Japan maintained the size of its JGB purchase and bought 5-10 year maturities worth 420 billion yen ($4.03 billion) and 25-40 year maturities worth 30 billion yen, as expected by market participants. ($1 = 104.3400 yen) (Reporting by Eimi Yamamitsu in Tokyo; editing by Uttaresh.V)

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