JGB futures rise on euro debt worries, BOJ eyed

TOKYO, June 15 (BestGrowthStock) – Japanese government bond futures
inched up on Tuesday as lingering worries over the potential for
contagion from the euro zone debt crisis supported safe-haven
demand for debt.

* In cash bonds, the five-year yield slipped 1 basis point to
0.405 percent (JP5YTN=JBTC: ), edging back towards the seven-year
trough of 0.365 percent hit last week.

* Banks have been pooling funds in five-year notes as bank
lending has been falling with companies reluctant to make fresh
capital investments, leaving banks with surplus cash to invest.

* The Bank of Japan ends a policy meeting on Tuesday and is
expected to keep monetary policy unchanged and discuss what
Europe’s debt troubles mean for its own fragile economic
recovery. It is expected to announce details of a new loan scheme
aimed at redirecting money to industries with growth potential.

* “If someone asks me when is the next rate hike, I will have
to say I don’t know. As long as this situation persists, there
will be a very limited room for five-year yields to rise,” said
Masahiro Kami, capital market analyst at Sumitomo Mitsui Banking

* Moody’s Investors Service downgraded Greece’s credit rating
to junk status on Monday, rekindling fears that Europe’s debt
troubles could spread to the banking sector. [ID:nN14207740]

* Sept JGB futures rose 0.09 point to 140.45 (2JGBv1: ), with
strong support at 140.18.

* Shorter-dated notes are pinned at low levels, also as the
BOJ is expected to keep interest rates at 0.10 percent for a
while to help Japan’s still fragile economic recovery.

* The benchmark 10-year yield was unchanged on the day at
1.230 percent (JP10YTN=JBTC: ).

* The 20-year yield edged up 0.5 basis point to 1.970 percent
(JP20YTN=JBTC: ) as some dealers sold ahead of Wednesday’s 20-year
auction, traders said. The 30-year yield climbed 1 basis point to
2.045 percent (JP30YTN=JBTC: ). The yield curve steepened slightly.

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(Reporting by Rika Otsuka; Editing by Hugh Lawson)

JGB futures rise on euro debt worries, BOJ eyed