JGBs slide on Nikkei, bonds sold ahead of auction
Published May 14th, 2007
Japanese government bonds fell on Monday, hurt by a rise in share prices and selling by dealers looking to hedge against a five-year debt auction in the following session.
The yield on two-year notes, the most sensitive to the monetary policy outlook, hit a 10-month high on Monday on growing expectations that the Bank of Japan will boost rates to 0.75 percent in the third quarter from 0.50 percent currently.
Activity was subdued as investors were reluctant to trade aggressively, wary that a strong reading for first-quarter gross domestic product on Thursday could pave the way for a BOJ rate rise and trigger more JGB selling, traders said.
“Investors find it difficult to pick up JGBs as the possibility of the BOJ hiking interest rates before the fiscal year-end next March remains high,” said Hidenori Suezawa, chief fixed-income strategist at Daiwa Securities SMBC.
Related Articles
