December 20, 2018 / 7:50 AM / 5 months ago

Yields on super-long JGBs fall on equity sell-off; curve flattens

TOKYO, Dec 20 (Reuters) - Super-long Japanese government bond (JGB) yields dropped to five-month lows on Thursday as the Nikkei share average skidded to its lowest level since September 2017, boosting the safe-haven appeal of debt.

Global shares tumbled after the Federal Reserve lowered projections only slightly for rate hikes in 2019, dashing hopes for a change to a more dovish stance.

The 10-year U.S. Treasury yield on Thursday fell to levels not seen since early April, providing additional support to super-long JGBs.

Twenty-year JGBs, 30-year JGBs and 40-year JGBs all traded at levels not seen since late July.

The 20-year yield lost 2.5 basis points to 0.515 percent, while the 30-year yield dropped 3.5 basis points 0.720 percent. The 40-year JGB yield slipped 4.5 basis points to 0.850 percent.

The benchmark 10-year JGB yield fell half a basis point to 0.025 percent, while the shorter JGBs edged higher, leading to a flattening of the yield curve.

The two-year yield and the five-year yield both tacked on half a basis point, to minus 0.150 percent and minus 0.140 percent, respectively.

Ten-year March JGB futures closed up 0.12 point at 152.54, with a trading volume of 36,522 lots, finishing the session at their highest close since early August 2016.

On Wednesday, U.S. Treasury yields fell to more than eight-month lows after the Federal Reserve lowered projections for rate hikes next year and Fed Chair Jerome Powell said that balance sheet reduction is on autopilot. (Reporting by Tokyo Markets team; Editing by Subhranshu Sahu)

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